Revived Rate Hike Expectations Send Equities And Oil Tumbling

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The U.S. Dollar (CURRENCY:USD) saw some profit booking in forex markets during European hours today after it hit seven-week highs against a basket of currencies. The minutes of the last Federal Reserve meeting published yesterday have resurrected hopes that a rate hike can happen by as early as June, which instantly boosted the greenback outlook.

The Euro (EURUSD) traded mostly flat, down by 0.01% to 1.1215 while the British pound sterling (GBPUSD) gained ground, hovering at 1.4622, up 0.16%. Sterling found support after a report stated that U.K. retail sales increased in April even as clothing sales were down due to seasonal factors. According to the Office for National Statistics, retail sales came in at 1.3% in April, broadly higher than forecasts of 0.5% increase.

Equities and Oil lose

Most Asian equities traded weaker after the Fed’s meeting hinted at an earlier rate hike. The minutes indicated that a rate hike is imminent if economic data supports inflation and employment targets. Bombay’s S&P BSE Sensex (INDEXBOM:SENSEX) fell the most, registering a decline of 1.10% to 25,422.06. Japan’s Nikkei 225 (INDEXNIKKEI:NI225) managed a positive close, up by just 0.01% to 16,646.66.

Rate hike expectations dragged European equities as well as an upbeat U.K. retail sales failed to calm nerves. During early trading hours, Germany’s DAX (INDEXDB:DAX) had shed nearly 1.47% to 9,797.12 while the EURONEXT 100 (INDEXEURO:N100) followed losing 1.07% to 844.41.

Oil prices fell again dipping below $48 per barrel. The stronger dollar and an increased stockpile in the U.S. dampened outlook over the commodity. Analysts reiterated that oil prices continue to be exposed to inventory overhang, and recent supply disruptions are inadequate to erase glut fears. Brent Crude nosedived 2.11% to $47.90, and West Texas Intermediate slipped 1.87% to $47.29 during European hours.

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