The euro is under pressure.
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The prospect of faster interest rate rises from the Federal Reserve caused global shares to edge higher Thursday, but trading was light given the US Thanksgiving Day holiday.
The euro fell to its lowest level against the dollar in 17 months as cases of COVID-19 erupted across Europe.
US stock futures traded higher on Friday after markets were closed for the holiday. The S&P 500 and Dow Jones futures were each up by a small amount. The All-World index was up 0.1%.
The minutes of the Fed's most recent meeting suggest policymakers are concerned about the longer-term effects of inflation, which is running at its fastest pace in 30 years.
Markets show investors are pricing in two rate hikes in 2022, rather than one.
The dollar has risen against almost every major currency so far this year, while the two-year Treasury yield has tripled. Technology shares have tended to come under greater pressure in the stock market. There have been no long-term sell-offs with interest rates still low.
The tech sector lost ground again yesterday, with the theme of'selling winners' continuing. Michael Brown said in a daily note that the market remains within 2% of its all-time high and that it is hard to find a convincing bearish argument.
The dollar continued its march higher yesterday, benefiting from a significant pick-up in front-end yields, including the 2-year hitting new cycle highs.
The euro fell to its lowest against the dollar in over a year, and was last up just over 2%. The move was driven in part by the explosion in COVID-19 cases in Europe and ensuing restrictions on activity, as well as investors abandoning low-yielding currencies such as the yen and the Swiss Franc. The euro is down 8% this year, and was last up against the dollar.
Europe has become the epicenter of coronaviruses. Several countries, including Austria, the Netherlands and Sweden, have imposed restrictions after cases broke records.
The euro's weakness helped the equity markets in the region. The pan-continental Stoxx 600 was up 0.45%, led by gains in defensive stocks.
The surge has taken a toll on the countries hardest hit by the outbreak. Amsterdam's AEX and Frankfurt's DAX are the worst performers in the past week, with drops of 2% and 1.8% respectively. Vienna's ATX has lost 1.4%, compared with a London's FTSE 100 gain.
The major benchmark indices in Asia were under pressure from expectations of a faster US rate rise. That makes emerging markets less attractive to investors as they can get higher returns in dollar-based assets.
The Bank of Korea raised rates, and the Kospi lost 0.8%. Tokyo's Nikkei gained 0.7%, making it one of the best performing indices in the region, thanks to the falling of the Japanese currency.
As the US prepared to release some of its strategic crude inventories to temper the rise in the cost of gasoline, heating oil and other refined products, oil slipped back. Both crudes were down at $81.88 a barrel and $77.97 a barrel.
Business Insider has an original article.
