G20's protectionism shift hits stocks, dollar at 6-week low

Owen Stevens
March 21, 2017

The G-20 meet for currency markets added up to a revived expression of a worry of U.S. global trade relations and U.S. President Donald Trump stress on a stronger dollar. The index extended last week's weakness following recent interest-rate guidance from the U.S. Fed that was less hawkish than many had expected.

The dollar lost the race against a basket of currencies used to measure its broader strength.

Banks were among the biggest decliners in Europe, dragged down by a 3 percent fall in Deutsche Bank shares one day before the start of Germany's biggest lender's 8 billion-euro cash call.

Hedge funds and money managers slashed their net long position in COMEX gold for the second straight week in the week to March 14, and also cut long positions in silver, U.S. Commodity Futures Trading Commission data showed on Friday. However, many US banks have recently expressed doubt over Trump's plans, specifically a reform on border taxes, which is not likely to be upheld in the US Congress in any meaningful way.

"It's just one more day delaying talking about policy", said Ian Winer, director of trading at Wedbush Securities in Los Angeles.

The tech-heavy U.S. Nasdaq Composite index briefly bucked the trend and hit a record intraday peak of 5,915.120 before easing from that high.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.35 percent to 834.10 tonnes on Friday from 837.06 tonnes on Thursday.

Meanwhile, the dollar reversed early morning losses against the yen with USD/JPY 0.01% lower at 112.67 while USD/CAD rose 0.09% to $1.3359.

Gold has built on gains made last week as the United States dollar slides to six-week lows.

"Even though (the Fed) hiked (rates), the perception was that they were mildly dovish".

In commodities, oil prices continued their downward trend as OPEC supplies remained steady despite touted cuts, and rising USA drilling contributed to concerns about a supply glut. US crude settled down 56 cents, or 1.15 percent, at $48.22 a barrel. Benchmark 10-year U.S. Treasury notes yields hit a two-week low of 2.466 percent.

US crude dropped 1.4 percent to $48.09 a barrel.

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