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Daily Agenda: Dollar Rises as Investors Price in a Hike

Greenback rises on Lockhart rate-hike comments; PBOC adds to China stimulus; ICE declines to make LSE bid.

A single comment by Atlanta Federal Reserve Bank President Dennis Lockhart before the World Affairs Council summit yesterday warning that a rate hike in June was likely was enough to drive the dollar higher overnight as investors pondered a presumptive presidential race between former Secretary of State Hillary Clinton and real estate mogul Donald Trump. In particular, the dollar strengthened against emerging-markets currencies. Besides the prospect of a rate hike, the dollar was buoyed by longer-term concerns that the U.S. will succumb to protectionist policies. With derivatives markets increasingly pricing in an increase in U.S. interest rates in the very near term, the potential fallout for weaker portions of the global economic chain are now less certain.

BHP craters after Brazilian suit. Share prices for Australian mining giant BHP Billiton sold off by nearly 10 percent after Brazilian authorities unveiled a $45 billion suit. The charges relate to the collapse of a dam in November 2015 that caused 19 deaths. Rio de Janiero-based metal and mining multinational Vale was also attached to the suit.

ICE declines to bid for LSE. Today the Intercontinental Exchange acknowledged that it will not proceed with discussions to acquire the London Stock Exchange Group, paving the way for Frankfurt, Germany-based Deutsche Boerse to acquire the U.K.-based exchange. The statement by the Atlanta-based market operator came as a formal rejection of a contractual right to participate in the bidding process.

PBOC injects more stimulus. A new program rolled out by the People’s Bank of China yesterday will provide risk-free credit facilities to the China Development Bank, Agricultural Development Bank and Export-Import Bank as part of the pre-existing supplementary lending stimulus program. The announcement did not provide details but the move appears to be the latest attempt by China’s central bank to stabilize the domestic credit market as the process of retiring bad loans continues.

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