Dollar skids as US rate pause bets weigh

US dollar eases in Asian trade on expectations of Fed pause

US dollar eases in Asian trade on expectations of Fed pause

Growing bets the Federal Reserve will halt its multi-year rate-hike cycle sent the dollar lower across the board, while rising equity markets and support from OPEC production cuts helped lift oil prices.

MSCI's world equity index.MIWD00000PUS, which tracks shares in 47 countries, was up 0.77 percent, its highest since December 19.

On Wall Street, the resumption of US-China trade talks helped eased concerns about the fallout from an extended trade war between the world's two largest economies. Technology and consumer discretionary shares led gains.

Financial markets are also optimistic about United States officials meeting with their counterparts in Beijing this week for the first face-to-face talks since President Donald Trump and President Xi Jinping on December 1 agreed to a 90-day truce in their trade war.

U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that "we can live with".

He warned, however, that there is continued uncertainty about global growth, trade talks between the United States and China and USA monetary policy.

President Donald Trump on Tuesday expressed longing for the lower interest rates that the Federal Reserve put in place during the 2007-09 recession, saying he could boost the economy if the central bank brought interest rates to zero.

The Dow Jones Industrial Average .DJI rose 98.19 points, or 0.42 percent, to close at 23,531.35, the S&P 500 .SPX gained 17.75 points, or 0.70 percent, to finish at 2,549.69 and the Nasdaq Composite .IXIC added 84.61 points, or 1.26 percent, to end at 6,823.47.

On Friday, Fed Chairman Jerome Powell told the American Economic Association that the USA central bank is not on a preset path of interest rate hikes and that it will be sensitive to the downside risks markets are pricing in.

European shares were slightly lower amid lingering worries about the euro zone economy and Brexit. The pan-European STOXX 600 .STOXX finished down 0.15 percent.

The dollar index is down by 0.238 points, or about 0.25% at 95.512, coming off an earlier high of 95.688.

Gold benefited from the diminished risk of US rate hikes and held at $1,287.78, just off a six-month top. "That has been the story for a couple of weeks", said John Doyle, director of markets at Tempus Inc in Washington.

The Fed, which hiked interest rate by 25 basis points in December, the fourth such hike in the year, indicated two more increases in 2019.

Spot gold was up 0.3 percent at $1,288.02 per ounce as of 12:18 p.m EST (1718 GMT), having reached $1,298.42 an ounce on Friday, its highest since June 15.

Meanwhile, palladium was trading at a premium to gold, having touched a record high of $1,313.24 earlier in the session.

Benchmark 10-year notes fell 6/32 in price to yield 2.680 percent, up from 2.659 percent on Friday.

The metal, used mainly in emissions-reducing auto catalysts for vehicles, gained 0.5 percent to $1,306.55.

Stable equity markets and production cuts by the Organization of the Petroleum Exporting Countries helped oil prices rise for a fifth straight session.

Brent crude oil settled up 27 cents at $57.33 a barrel.

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