By Marc Jones
London(Reuters) - The dollar broke into positive territory for the year on Tuesday and bond yields were creeping higher again, as rising Oilprices fuelled bets that the Federal Reserve will flag more U.S. rate hikes this week.
May Dayholidays in many centres across Asiaand Europemeant trading was sparser than usual, though there was more than enough Newsflow to keep those that were open occupied.
The mood at the margins was upbeat after U.S. PresidentDonald Trumpextended Steeland aluminium tariff exemptions for Europe, Canadaand Mexicofor another month.
There were nerves too. Disappointing British Manufacturingand consumer lending figures added to the recent run of European data, worries about Iran's nuclear deal were keeping Oilup, while Apple's results were due later following recent whispers of weak Iphonedemand.
It was the dollar though making the running as it turned positive for the year before a two-day Fed meeting expected to pave the way for another two or even three U.S. rate hikes this year.
London's greenback bulls took advantage of the reduced Traderpresence in the rest of Europeto push it to almost $1.20 per euro and make good ground against the Swiss franc and the data-damaged pound.
"Provided the Fed conveys a steady-as-she-goes approach and it isn't seen to be back tracking - and there is no reason from the data why it should - the dollar should be consolidating and pushing on from this level," said Bank Of New York MellonSenior Currency StrategistNeil Mellor
He added that the key change has been the move of the U.s. Treasurybond yield to 3 percent last week.
It was nudging up at 2.96 percent on Tuesday, which also left the gap between U.S. and German 10-year benchmark bond yields just off its widest level in nearly three decades. [GVD/EUR]
"It has been a bit like a dam bursting," Mellor said of the Treasury move.
For Europe's stocks followers, only London's FTSE and Denmark's bourse were open.
They were both higher, thanks to the boost to exporters of lower domestic currencies and relief that Trump had postponed Steeland aluminium tariffs on the EU, Canadaand Mexicoand given permanent exemptions to several other allies.
U.S. stock futures were steady and in Asia, Japan's Nikkei closed up 0.2 percent while Australian shares hit seven-week highs as its monster metals sector breathed easier.
Apple's quarterly results are due after Wall Street closes and will be a big focus after several weeks of speculation about ebbing Smartphonedemand based on selective reports from companies in its Supply Chain
Technology Sectorresults so far - at least from the likes of Amazon, Alphabet, Microsoft, Samsungand SAP - have broadly beaten forecasts for Q1 and the overall aggregate U.S. earnings growth is tracking seven-year highs of almost 25 percent.
"Earnings have been really strong so far. Microsoftand Amazonhad a bumper quarter. The only concern has been Apple," said Hirokazu Kabeya, Chief Global Strategistat Daiwa Securities
SUBMERGING MARKETS
The stronger dollar was felt widely across commodity markets and the emerging economies that are now borrowing record amounts of debt in the U.S. currency, data from the Bank For International Settlementsrevealed this week.
MSCI's emerging market index fell 0.4 percent with Russian dollar-denominated stocks chalking up some of the biggest losses and currencies and bonds staying under pressure too.
Brent Oilprices eased off four-month highs of just over $75 a barrel set on Monday on worries that U.S. PresidentDonald Trumpmay pull out of the 2015 Irannuclear deal and thereby bring back sanctions on its OilOutput
The White Housesaid on Monday that information provided by Israelon Iran's nuclear programme had provided "new and compelling details".
A high-level U.S. trade delegation will be in Beijingfor meetings later this week, amid lingering worries about a possible trade war between the world's top two economies.
Copper, which is highly attuned to China's economy, hit its lowest in three weeks at $6,752 a tonne, accelerating downwards after it broke below its 200-day moving average at $6,800.
(Reporting by Marc Jones; Editing by Andrew Heavens)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)