The Dollar Tumbles to 5-Month Low as Emerging Markets, Commodities Rise

The dollar tumbled to a five-month low on Thursday as commodities and emerging markets surged ahead. Central banks, including Norway and the U.S., showed a willingness to be accommodative with monetary policies. The MSCI Emerging Markets Index of equities climbed higher, set to secure its highest close in three months.

The Dollar Spot Index declined for the second straight day after the Federal Reserve pushed back its forecast for interest rate hikes this year. Stocks in Europe and the U.S. fell as losses in healthcare and bank shares were offset by raw material producers.

Zinc and copper saw gains, while Brent rose to $40 a barrel. Stocks for energy companies in South Africa and Saudi Arabia rallied.

The actions from central banks across the world highlights concerns that the global economy is not showing signs of improvement. In the first six weeks of the year, global stocks erased $9 trillion in value. Janet Yellen, Fed Chair, stated on Wednesday that weak global growth was the reason for adjusting the path for future rate hikes this year.

Norway’s central bank cut its rates on Thursday. The Bank of Japan and the European Central Bank made similar moves. The U.K. and Switzerland left rates unchanged.

The dollar tumbled 1% Thursday after falling 1.1% last session. Brazil’s real and South Africa’s rand saw the biggest gains in emerging market currencies, with each climbing at least 1.9%.

Australia’s dollar moved ahead 1.1% on news that the country’s jobless rate declined unexpectedly. New Zealand’s currency also strengthened, climbing 1.7% after economic growth in the fourth quarter was higher than expected.

The British pound was up 0.6% against the dollar. The Norwegian krone gained 1.1% after the central bank cut its borrowing costs.

A gauge of commodities rose 1.4% Thursday in the U.S. On the London Metal Exchange, all six metals surged ahead, supported by a weaker U.S. dollar.

Gold for immediate delivery jumped 0.2% to $1,264.83 per ounce. Copper was up 1.4% as inventory levels declined 3.7%.

Brent crude jumped 0.7% to $40.63 per barrel. West Texas Intermediate gained 2.3% to reach $39.35. Output in the U.S. declined to its lowest level in over 12 months. Inventories rose by 1.3 million barrels, the lowest increase in five weeks.

Oil also benefited from news that major oil-producing companies will be meeting on April 17 in Doha to discuss freezing output.