Markets retreat as dollar declines - 24.3.2015

US stocks edged lower on Monday as the dollar weakened against major currencies. The dollar continued falling after Fed’s statement last week pushed back expectations of interest rate hike as the central bank lowered its forecast of median interest rates to 0.625 percent from 1.125 percent by the end of 2015 and revised downward US growth outlook. On Monday Federal Reserve Vice Chairman Stanley Fischer said that the interest rate hike will likely happen before the end of the year and the pace of interest rate hikes would not be uniform or predictable. He emphasized that the Fed will be making decisions based on economic data and will not be following a predetermined plan. He warned that investors shouldn’t expect a repeat of the 17 rate increases at consecutive FOMC meetings starting in 2004. He mentioned that officials are waiting for the April 3 monthly employment report after two positive reports in the first quarter of 2015. Federal Reserve Bank of San Francisco President John Williams said a discussion should happen mid-year about raising interest rates. The ICE US Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, was down about 1% to 97.00. Sales of existing homes rose 1.2% in February, less than expected. Today at 13:30 CET March inflation data will be released in US. The tentative outlook is positive for the dollar. At 14:00 CET January Housing Price Index will be published. The tentative outlook is negative. And at 14:45 CET advance Manufacturing PMI for March will be released by Markit. The tentative outlook is negative.

European stocks retreated on Monday from multi-year highs as investors took profits amid worries over Greece. The Stoxx Europe 600 lost 0.9%. DAX lost 1.2 % as automaker stocks slipped with Volkswagen down 3.4 % while Peugeot declined 2.3 %. Euro advanced against dollar. After meeting Greece’s Prime Minister Alexis Tsipras Angela Merkel indicated that Greece still has to secure the approval of international creditors for its economic reform program before any more aid will be released. It was reported earlier that finance ministers could gather as early as March 27 to approve a payment if Greece submits acceptable reform proposal. Merkel gave no indication that the meeting will happen. Today from 9:00 to 10:00 CET advance March Manufacturing and Services PMI for France and Germany will be released by Markit. The tentative outlook is positive for euro. At 10:30 CET March inflation data will be released in UK. The tentative outlook is negative for pound.

Nikkei is falling today as investors took profits after Chinese factory activity in March unexpectedly fell to an 11-month low as indicated by HSBC/Markit PMI release.

Oil prices rose on Monday helped by weaker dollar. The West Texas Intermediate oil May futures gained 1.9% and settled at $47.45 a barrel, the highest settlement for a most-active contract since March 11. May Brent crude oil added 1.1% and ended at $55.92 a barrel. As CFTC data indicate, investors reduced net long positions in WTI for the fourth consecutive week, to 144,000 contracts, the lowest level since March 2013.

April natural gas fell 1.9% to $2.733 per million British thermal units on Nymex.

Gold prices advanced on Monday for a fourth session in a row on back of declining US dollar and amid concerns over Greece’s debt problems.