Dollar Rally Regaining Strength as Market Sets Aside Divided Fed

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The Case for Bullish Stocks With a Strong Dollar

The dollar advanced against its major peers as investors set aside concern that U.S. interest-rate increases may be delayed by divisions at the Federal Reserve.

The Bloomberg Dollar Spot Index stalled this month amid a rash of weaker-than-forecast economic reports, after rising 20 percent in the past three quarters. Those pushing for a June liftoff for benchmark borrowing costs were countered by others saying energy-price declines and a stronger dollar would continue to curb inflation, arguing for later in the year. While reports will show U.S. jobless claims rose last week, retail sales for March are set to recover, according to Bloomberg surveys before reports Thursday and April 14 respectively.

“The FOMC minutes show there were a few supporters for a June rate hike,” said Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, referring to the Federal Open Market Committee. “There seems to be serious talk of a June increase, so there was some dollar buying amid the hawkish tone.’

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.1 percent to 1,193.99 as of 10:11 a.m. Tokyo time.

The dollar advanced 0.1 percent to 120.26 yen and climbed 0.1 percent to $1.0769 per euro.

Jobs Growth

The minutes don’t identify the participants or give precise numbers of those holding a certain view as the Fed moves toward the first rate increase in almost nine years. The discussion occurred before the release of disappointing jobs growth figures for March.

‘‘Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting,” according to minutes of the March 17-18 FOMC meeting released Wednesday in Washington.

While others argued for later in the year, a couple of policy makers said the economy probably wouldn’t be ready for tighter policy until 2016.

Fed Governor Jerome Powell said Wednesday that hidden slack in the labor market justifies a gradual approach to tightening. Fed Bank of New York President William C. Dudley said the central bank should err on the side of waiting too long as it considers when to raise interest rates for the first time in almost a decade.

Employers added 126,000 jobs in March, a report showed last week, breaking a yearlong streak of monthly gains exceeding 200,000, the longest such stretch since 1995.

“In order for June to truly be on the table, we need to see a substantial revision to Friday’s report and well above 250,000 for the next two employment releases,” said Jennifer Vail, head of fixed-income research in Portland, Oregon, at U.S. Bank Wealth Management, which manages $126 billion. “The second quarter is going to be a high volatility period for the dollar.”

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