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Dollar Rallies Most in 8 Weeks

Dollar Rallies Most in 8 Weeks

Dollar Rallies Most in 8 Weeks

A dollar gauge rallied the most in eight weeks as the Federal Reserve acknowledged surprise in the improvement in the U.S. labor market and amid heightened geopolitical turmoil.

A basket of emerging-market currencies fell against the dollar this week as Russia and Ukraineblamed each other for the downing of a Malaysian Airline System Bhd. plane and Israel’s military began a Gaza ground incursion. The euro dipped below $1.35 for the first time in five months on diverging central-bank policies. Canada’s dollar climbed to the strongest level in a week after an inflation gauge rose. The Labor Department may report July 22 that consumer prices increased in June.

“The data shows the economy here is coming along,” Robert Lynch, a currency strategist at HSBC Holdings Plc in New York, said yesterday in a telephone interview. “You have the beginnings of policy normalization in the U.S.”

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, gained 0.3 percent to 1,009.53 in New York, the biggest weekly increase since May 23. The benchmark touched 1,011.12, the highest since June 20.

The yen fell less than 0.1 percent to 101.34 per dollar on the week, and rose 0.6 percent to 137.08 per euro for a second weekly gain. The euro slid 0.6 percent to $1.3524, the biggest drop since June 13.

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American Stocks Advance on Alcoa Earnings

American stock market

American stock market

U.S. stocks rose following a two-day selloff, as Alcoa Inc. rallied after earnings topped estimates and investors awaited minutes from the Federal Reserve’s last meeting.

Alcoa jumped 6 percent after kicking off earnings season with better-than-forecast results. American Airlines Group Inc. rallied 4.1 percent after raising its margin forecast. Facebook Inc. advanced 2.9 percent to pace gains among a gauge of technology shares. Bob Evans Farms Inc. slid 4.2 percent as quarterly revenue missed estimates.

The Standard & Poor’s 500 Index (SPX)added 0.3 percent to 1,969.21 at 1:06 p.m. in New York after slumping 1.1 percent over two days. The Dow Jones Industrial Average (INDU) gained 43.71 points, or 0.3 percent, to 16,950.33. The Russell 2000 Index was little changed following its biggest two-day drop since April. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.

“The market can go down, but it won’t stay down,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “The fact that the market is still questioning all these things that are going on is a very healthy sign. I still think the Fed is going to be more concerned about making absolutely sure that the U.S. economic recovery is under way and staying under way.”

U.S. equities retreated a second day yesterday amid growing investor concern that stocks have rallied too fast after benchmark indexes ended last week at all-time highs. Raymond James & Associates Inc. said stocks are vulnerable to losses and Citigroup Inc.’s chief U.S. equity strategist cited concerns for a “severe” pullback.

Pakistanis Dont Trust Rupee Rally

pakistani dont trust rupee

pakistani dont trust rupee

The Pakistan rupee’s biggest rally in 16 years has been nothing but a tease for Nazim Salim.

Seeing it as an opportunity to settle an old debt in dollars cheaply, he sought out Karachi’s money changers to buy $200. Yet all four traders Salim approached in the kerb market, as it is known to Pakistanis, had the same answer: They had no dollars to sell him.

The hoarding of greenbacks in the kerb market, where a fifth of Pakistan’s foreign-exchange transactions are conducted, shows money changers are unconvinced the local currency’s gains will last. While the rupee has been lifted to a nine-month high by pledges of more than $8 billion in foreign aid, the nation’s economy remains hampered by a deteriorating trade balance, power shortages and a Taliban insurgency in the north.

“With the dollar now in a big, rare retreat, I figured this is the perfect time to end this debt,” Salim said over the sound of vendors hawking tea, biryani and tobacco in the streets below the apartment where he makes and sells dental crowns. “I couldn’t believe it.”

After losing 46 percent of its value over 10 straight years of declines, the rupee has gained 7.5 percent in 2014, touching 97.6 per dollar on March 24, the strongest since June 4, before closing at 97.96 yesterday. Its 7.1 percent advance this month is the best performance among all currencies tracked by Bloomberg.

ETF Get dollar 41 Billion Erasing Stock Withdrawals on Economy

Investors who beat a path out of global equity markets earlier this year are stampeding back in.

More than $41 billion has returned to U.S. exchange-traded funds that own shares in the past four weeks, reversing withdrawals that swelled to as much as $40.2 billion last month, according to data compiled by Bloomberg. Cash has flowed back as the MSCI All-Country World Index rallied 5.8 percent from the four-month low it reached Feb. 4, when turmoil in emerging markets spurred speculation the global recovery would slow.

The reversal is the latest sign of confidence in a five-year bull market that has gained momentum amid 11 straight quarters of expansion in U.S. gross domestic product. The MSCI gauge this month reached its highest level since 2007 after investors blamed cold weather for U.S. retail sales and housing data that trailed economists’ forecasts while world leaders pledged to maintain accommodative policies to spur growth.

“Dwindling outflows show investors regaining confidence that the global economy is going to grow,” Joseph Quinlan, the chief market strategist at Bank of America Corp.’s U.S. Trust, which oversees about $330 billion, said by phone from New York. “When you look at growth in the U.S., this is emblematic of one economy pulling other economies along.”

About $1.5 billion was deposited to global equity ETFs on March 11, bringing the total inflows for the month to $15.3 billion, data compiled by Bloomberg show. Investors pulled almost $15 billion out of the funds in January and the MSCI All-Country World Index was down as much as 5.8 percent through Feb. 4 after Argentina unexpectedly devalued the peso, Turkey doubled interest rates and manufacturing growth slowed in China.

Bouygues Negotiates dollar 2.5 Billion Mobile Asset Sale to Iliad

Bouygues SA  (EN), seeking to preempt antitrust concerns over its proposed wireless merger withVivendi SA’s (VIV) SFR, is in talks to sell its network and some spectrum to Iliad SA (ILD) for as much as 1.8 billion euros ($2.5 billion).

The exclusive negotiations mean Bouygues Telecom can make its case to the French Competition Authority “from the outset with measures designed to maintain a competitive market for the benefit of consumers,” Bouygues said yesterday. Iliad, the discounter selling mobile packages under the Free brand, said it will finance any deal with existing resources and debt, without the need to raise capital.

The talks signal the construction-to-media conglomerate is making a push to avoid a lengthy review by the competition watchdog over a deal that would create a carrier with more than 21 million subscribers to rival market leader Orange SA. (ORA) Bouygues and Altice SA (ATC) have begun informal meetings with French officials as each side seeks to convince Vivendi to choose its bid for SFR,France’s second-largest phone company, people familiar with the talks said.

Bouygues, bidding against Altice and its Numericable unit for SFR, said last week its offer — 10.5 billion euros in cash plus its Bouygues Telecom unit — would value the Vivendi asset at 14.5 billion euros, or about $20 billion, before synergies with its own mobile unit.

Bouygues shares rose 7 percent to 32.20 euros at 9:17 a.m. in Paris, taking their gains to 12 percent since its March 6 bid. Iliad jumped 13 percent to 213.70 euros for a 44 percent increase since the beginning of this year.

Credit Suisse US Clients in Limbo as Probe Inches Ahead

Thousands of Credit Suisse Group AG (CSGN)’s U.S. clients still don’t know whether tax authorities will learn their identities as prosecutors work to conclude a three-year probe of how the bank helped them evade taxes.

U.S. senators last week faulted the Justice Department for securing names for only 238 of 22,000 Americans with Credit Suisse accounts, saying the bank helped them hide as much as $10 billion from the Internal Revenue Service. The pressure of a subcommittee report and hearings will force prosecutors to act more aggressively as they negotiate a settlement with Credit Suisse to end the probe and get more names, said Jeffrey Neiman, a former federal prosecutor.

“These hearings are going to give some sort of momentum to the Justice Department,” said Neiman, now at Marcus Neiman Rashbaum LLP in Fort Lauderdale, Florida. “Criminal cases are all about momentum, where one event leads to another, which leads to culmination.”

Credit Suisse is the largest of 14 Swiss banks under criminal investigation for helping Americans cheat the IRS. At the Feb. 26 Senate hearing, Chief Executive Officer Brady Dougan apologized, saying a small group of Swiss-based bankers appear to have broken U.S. law and fooled top managers. The bank began slashing its U.S. client list in 2008, and the 3,500 remaining comply with U.S. tax laws, General Counsel Romeo Cerutti said.

Senator Carl Levin, the Michigan Democrat who led the hearing, said that wasn’t enough. Credit Suisse, the largest Swiss bank after UBS AG (UBSN), can’t move forward until it helps the Justice Department identify account holders still shielded by Swiss bank secrecy, he said.

 

Obama Budget Raises dollar 276 Billion From US Multinationals

President Barack Obama is proposing more tax increases for U.S. multinational corporations, seeking ways to prevent them from avoiding taxes by exploiting gaps in international law.

In the fiscal 2015 budget proposed yesterday, the Obama administration seeks to generate $276 billion over the next decade from what it calls loophole-closing in the international tax system. The revenue — 75 percent more than was sought through such changes in last year’s budget plan — would be used to reduce corporate tax rates.

Among those affected by the revisions would be pharmaceutical companies looking to relocate to Ireland, technology companies selling cloud-based services outside the U.S., and non-U.S.-based companies borrowing money in the country.

The Obama plan isn’t likely to move forward in a divided Congress that can’t agree on the broad outlines of tax policy, let alone the details. The proposals instead set down a marker in the corporate tax debate, said Manal Corwin, national leader of the international tax practice at KPMG LLP inWashington.

“I don’t know that anybody’s predicting that we’re suddenly going to see tax reform happen,” said Corwin, formerly a Treasury international tax official in the Obama administration. “There are certain themes that seem to be repeating themselves.”

Obama, congressional Republicans and many U.S. multinational companies support reducing the corporate tax rate of 35 percent, which is the highest in the industrialized world.

 

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