In other commodities, benchmark crude oil prices had risen some ten percent overnight on the decline in the United States dollar.
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WTI crude futures climbed 8 percent to $32.28 a barrel, as the falling dollar countered concerns in the market over a steep gain in US crude inventories.
ENERGY: The dollar’s retreat on Wednesday in particular helped oil prices spike as the weaker currency makes oil cheaper for worldwide investors buying with other currencies.
Additionally, the weaker-than-expected economic data that revealed the USA services sector expanded at a slower pace month-over-month also weighed on expectations the Fed would hike rates again soon, which further pressured the United States dollars. The rally helped reverse weakness seen earlier in the year, when the loonie slumped to a 13-year trough of C$1.4689 amid a tumble in crude oil.
The dollar fell considerable as the United States economy signaled at a slow growth.
“It’s a stretch to say that suddenly implies emerging markets are going to do really well…We’re still in a world of sub-trend growth so that’s not good news for EM assets in a broader sense, and volatility remains quite high”. As U.S. debt prices jumped, the 10-year U.S. yield hit a 10-month low of 1.828 percent. Since the “strong” dollar had been identified as one reason for the Fed to take its time in raising rates, and further weakening of the yen and euro through more monetary stimulus should lead to a stronger dollar, will these actions on the part of the Bank of Japan and the ECB cause the Fed to rethink its rate hikes? Their bounce was modest relative to the 1.9 percent drop in the benchmark S&P 500 Index on Tuesday.
That’s broadly in line with comments from New York Fed President Bill Dudley Wednesday, who told Market News International that financial conditions are “considerably tighter” than they were when the December meeting took place.
The euro was last up 1.59 percent against the dollar at $1.10950 EUR=EBS.
Mining shares rose 7 percent, the biggest gainers on the index, with Anglo American, BHP Billiton, Antofagasta, Glencore and Rio Tinto up 7.2-12.5 percent.
The Fed also fueled market expectations that its previously stated goal of about four interest rate hikes this year wasn’t likely to come to fruition, with its post-meeting statement released in late January.
Statoil jumped 8 percent as the Norwegian oil firm announced plans to cut spending after reporting a huge annual loss for 2015.
Britain’s FTSE 100 rose 1.3 percent to 5,910.11 by 1125 GMT, set to snap a three-day losing streak that had seen the index shed 4 percent.
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The top faller on the United Kingdom blue-chip index was soft drink bottling company Coca Cola HBC, which slid 5 percent after Barclays downgraded its rating to “underweight” on concerns over its emerging market exposure. Meanwhile USD/JPY tumbled to 117.04 yen.
