World stocks opened this week on a cautious footing on Monday after the G20’s decision to drop a pledge to avoid trade protectionism, while the U.S. Federal Reserve’s conservative rate guidance continued to push the dollar lower.
Asian stocks were mixed, European stocks fell as much as 0.3 percent and U.S. futures pointed to a fall of around 0.2 percent at the open on Wall Street.
The dollar fell to a six-week low, falling four days in a row for the first time since early November.
G20 financial officials reiterated their warnings against competitive devaluations and disorderly currency markets. The dollar didn’t show much reaction, taking its cue instead from the moves in U.S. yields.
“Sentiment towards the dollar has deteriorated significantly,” Societe Generale FX analysts said in a note to clients on Monday.
The dollar index of its value against a basket of six currencies fell to a six-week low of 100.02 on Monday.
The dollar has been on the retreat since the US Federal Reserve raised interest rates on Wednesday but stopped short of predicting a sharper acceleration in monetary tightening over the next two years.
For currency markets, the meetings of Group of 20 financial leaders added up to a renewed expression of concern about the United States’ global trade relations and by implication the Trump White House’s concern over the strong US dollar.
The post-meeting communique retained language on avoiding currency manipulation which has previously seemed aimed chiefly at Japan and China, but it omitted a call for free trade seen as opening the door to more overt efforts by Washington to shift the balance of its international relationships.
“If they are going to push on trade, then you have to expect that the US will want to talk to its major trade partners about where it feels there is unfairness in the relationships,” said Simon Derrick, head of global market research with Bank of New York Mellon in London.Tags: dollar, g20