Global stocks flat as the dollar dips from two-year highs

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US GDP data is keenly awaited with European markets opening mixed as the dollar’s strength threatens emerging-market currencies

London — The dollar slipped from 23-month highs on Friday ahead of keenly awaited US GDP data for the first quarter, while global shares were on track for a fifth successive weekly gain despite subdued trade.

The other big mover in currencies was the yen, which gained as speculators cut short positions ahead of the holidays, which will see most Japanese markets shut for six whole trading days. All eyes were on the US GDP release, which will be closely watched after a string of largely resilient data from an economy in its 10th year of expansion. The data will be out at 12.30pm GMT.

“Today’s GDP print in the US has become even more important given the recent move higher in the dollar,” said Mohammed Kazmi, portfolio manager at UBP. “The dollar’s strength is beginning to gain investor attention and has led to vulnerable emerging markets, such as Argentina and Turkey, appearing exposed once again, while it also seems to be a headwind for US risk markets in which momentum is stalling, despite decent first-quarter earnings thus far.

On Thursday, European Central Bank vice-president Luis de Guindos opened the door to more money-printing if needed to boost inflation in the eurozone. “Majors depreciate when the global economy improves and also when global investors become more risk-averse,” said UBS strategists in a note. Central banks are done tightening policy, according to a majority of economists polled by Reuters, with the growth outlook wilting across developed and emerging economies along with scant prospects for a surge in inflation.

 

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