Dollar Climbs as Crude-Oil Rebound Eases Global Markets Tension

  • WTI futures rise more than 2% as U.S. stocks post gains
  • Greenback rises against most majors; index at 11-year high

The dollar climbed as rebounding oil prices provided a respite from the selloff that’s gripped global financial markets this year.

The U.S. currency rose against most of its major peers and an index of the greenback touched an 11-year high as West Texas Intermediate crude gained more than 2 percent. The dollar erased earlier losses against the euro and yen, while the South Korean won and New Zealand dollar led losses against the greenback. U.S. stock indexes rose more than 1 percent as demand improved for riskier assets.

"The dollar will benefit from a sense of stability from global markets," said Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange Inc. in Washington. "That rise in the price of oil off of the lows sends a nascent sense of stability to investors."

Financial markets across the globe have whipsawed since the start of 2016 as Chinese policy makers struggle to stabilize stocks and as commodity prices slide, boosting demand for havens. The yen has strengthened 1.8 percent against the dollar since Dec. 31.

The dollar rose 0.1 percent to $1.0865 per euro as of 5 p.m. in New York and was 0.3 percent higher at 118.06 yen. The Bloomberg Dollar Spot Index climbed 0.1 percent to 1,246.15, reaching the highest level in data going back to 2005.

Market Watch

“The rise in equities has helped risk sentiment, which is pushing the U.S. dollar higher,” said Sireen Harajli, a currency strategist at Mizuho Bank Ltd. in New York.

Federal Reserve Bank of St. Louis President James Bullard, one of the most vocal policy makers in recent months arguing to raise interest rates, sounded a more cautious note Thursday by saying the latest decline in oil prices may delay the return of inflation to the central bank’s 2 percent target.

“With renewed declines in crude oil prices in recent weeks, the associated decline in market-based inflation expectations measures is becoming worrisome,” Bullard, who votes on policy this year, said in a speech in Memphis, Tennessee. The central bank’s next policy-setting meeting will take place on Jan. 26-27.

Before it's here, it's on the Bloomberg Terminal.