Oil rises on weak dollar, Treasury yields hit five-week high ahead of FOMC

Tue Apr 26, 2016 4:25pm EDT
 
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By Dion Rabouin

NEW YORK (Reuters) - The dollar fell on Tuesday after weaker-than-expected U.S. economic data boosted expectations the Federal Reserve would hold interest rates lower for longer, while U.S. Treasury yields touched five-week highs as traders made room for government debt supply ahead of the central bank's policy statement.

U.S. durable goods orders rebounded less than anticipated in March and a survey of American consumer confidence missed expectations, adding to a slew of weak data on the U.S. economy in the first quarter.

Tuesday's economic data "plays into the idea that the Fed need not be in any rush to raise rates," said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York.

The lack of uncertainty about Wednesday's statement after a two-day meeting of the policy-setting Federal Open Market Committee also led traders on Wall Street to hold stocks near their highest levels of the year.

"I don't think there will be any surprises there," said Gordon Charlop, a managing director at Rosenblatt Securities in New York, of the Fed meeting.

"Could they throw a curveball at us? Of course that's always a possibility, but that's not their style, and they've been pretty accommodative ... so I don't think traders are overly concerned."

The Dow Jones industrial average rose 13.08 points, or 0.07 percent, to 17,990.32, the S&P 500 gained 3.91 points, or 0.19 percent, to 2,091.7 and the Nasdaq Composite dropped 7.48 points, or 0.15 percent, to 4,888.31.

Fed funds futures show investors see no chance the U.S. central bank will raise benchmark interest rates above the current rate of 0.25 to 0.5 percent on Wednesday. Tuesday's unexpectedly weak data cut the likelihood of any rate hike in 2016, analysts said.   Continued...

 
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York April 12, 2016. REUTERS/Lucas Jackson