Dollar climbs, Gold price retreated, Aussie jumps 

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Flight to Haven Assets Eases Before Key Events

  • Dollar climbs from eight-month low while stocks turn higher
  • Australian dollar jumps, erasing losses, after GDP report

A move toward haven assets ahead of a barrage of key events eased as the dollar edged higher and Asian equities reversed morning losses.

The U.S. currency advanced from an eight-month low while gold retreated after touching the highest level since November. Treasuries steadied after climbing on news that China is prepared to buy more of the notes. Most Asian equities advanced, with shares in Shanghai leading gains. The Aussie dollar climbed after growth Down Under met expectations, soothing concerns of a deeper slowdown.

Traders have been reluctant to add to risk positions ahead of testimony from former FBI Director James Comey, the ECB’s policy decision and the U.K. election. Thursday is shaping up to be a pivotal day for capital markets. Investors had already taken a defensive stance this week following a diplomatic spat among energy producing nations in the Middle East and the weekend’s terror attack in London.

Here are some of the key upcoming events:

  • Hedge fund and asset managers are gathering at the Sohn Conference in Hong Kong to present their investment ideas. Follow our live blog of the event here. Muddy Waters Capital’s Carson Block said he will release a short idea on a Hong Kong listed stock, while Oasis Management’s Seth Fischer and Tybourne Capital Management’s Eashwar Krishnan will also speak.
  • The European Central Bank releases its policy decision Thursday. Mario Draghi speaks later that day. Don’t expect policy changes, but the bank may drop the reference to “downside” risks to growth, while reiterating a weak inflation outlook, Bloomberg Intelligence said.
  • Surveys of U.K. voters over the past few weeks have indicated a tightening race for Thursday’s election, increasing the chance that Prime Minister Theresa May might not bolster her majority.
  • Comey’s testimony may give clues on how politically effective the Trump administration will be in refocusing attention on its policy agenda. Comey will stop short of saying if he thinks the president sought to obstruct a federal probe of Russia’s role in the 2016 election, according to a person familiar with Comey’s thinking.

Here are the main moves in markets:

Currencies

  • The yen fell 0.2 percent to 109.64 per dollar as of 2:07 p.m. in Tokyo, after climbing 0.9 percent on Tuesday.
  • The Bloomberg Dollar Spot Index rose 0.1 percent, after sliding 0.4 percent in the previous session to the lowest level since October.
  • The Aussie climbed 0.5 percent to 75.41 U.S. cents, the highest level in a month. Data showing the economy expanded 0.3 percent in the first three months came a day after the central bank said growth slowed in the March quarter.

Stocks

  • Japan’s Topix index gained 0.2 percent, erasing an earlier decline of as much as 0.3 percent. Australia’s S&P/ASX 200 Index climbed 0.1 percent, after closing Tuesday at the lowest level since February.
  • The Shanghai Composite jumped 1.1 percent. Hong Kong’s Hang Seng was little changed, after topping 26,000 on Tuesday for the first time since July 2015.
  • Futures on the S&P 500 added 0.1 percent after the underlying gauge lost 0.3 percent on Tuesday.

Commodities

  • Gold fell 0.3 percent to $1,291.21 an ounce after surging 1.1 percent in the previous session.
  • WTI crude oil lost 0.1 percent to $48.14 a barrel, following its 1.7 percent surge on Tuesday.

Bonds

  • The yield on 10-year Treasuries rose two basis points to 2.16 percent, after dropping four basis points on Tuesday.
  • Australian government notes with a similar maturity rose two basis points to 2.40 percent.

Source: Bloomberg – Flight to Haven Assets Eases Before Key Events: Markets Wrap

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