Colin Cieszynski, chief market strategist at CMC Markets Canada, said the U.S. greenback strengthened amid signs that the U.S. Federal Reserve may raise interest rates as early as June.
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Oil prices settled largely unchanged as worries about Canadian and Nigerian supply outages offset the impact of a stronger dollar.
“To reiterate what some of my colleagues have said, June is definitely a live meeting”, New York Fed President William Dudley, a voting member of the Federal Open Market Committee, said.
Global equity markets rose on Friday as investors took in stride the possibility the Federal Reserve may hike interest rates in June, a view that helped USA bond yields to rise and lifted the dollar to a third straight week of gains.
“We’re on track to satisfy a lot of the conditions we need to see to continue the monetary policy tightening process”, he said.
In New York, traders continued to digest hints from the Fed on a rate hike coming earlier than previously expected.
Wall Street was unhappy after the April meeting when the rates didn’t rise, and was afraid that the Fed was catering more toward the global economy, rather than focusing on the domestic one in their care, the Unites States’.
At 2:55 pm, the Dow Jones industrial average.DJI was down 0.69 percent at 17,406.16 points and the S&P 500.SPX had lost 0.65 percent to 2,034.41. Crude extended declines as USA stockpiles unexpectedly increased, keeping supplies at the highest level in more than eight decades.
The S&P 500 index showed six new 52-week highs and four new lows, while the Nasdaq recorded 14 new highs and 71 new lows. It fell 1.7 percent on Wednesday.
The Canadian dollar fell for a third straight session, giving back 0.48 of a USA cent to 76.31 cents US.
Energy and raw-materials industries account for about 33 per cent of the broader benchmark by market capitalization and have led gains this year, with the materials group surging as much as 43 per cent for its best year-to-date performance in three decades. The dollar held at its highest in more than seven weeks against a basket of major currencies early on Friday, on track for a third week of gains as investors position themselves for an early rate hike.
U.S. West Texas Intermediate (WTI) crude futures fell 41 cents to settle at $47.75 a barrel. “Commodities were weaker across the board as the stronger dollar weighed on investor sentiment”.
WTI’s June contract settled down 3 cents at $48.16 a barrel, expiring as the front-month.
USA crude added 1 percent to $48.64 a barrel, up 5.3 percent for the week, while Brent crude advanced 0.7 percent to $49.17, up almost 2.8 percent for the week. It had fallen more than 3 percent during the session.
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There are complications with this of course: the U.S.’ economy has to continue to be on the rise for the hike to actually occur, and there are various global concerns that could stop the hike, such as the referendum in June to see if the United Kingdom will remain in the European Union, as well as China’s economic worries.
