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Equity benchmarks look to end week on positive note

Friday 06:00 GMT. The US dollar continues to push higher and sovereign bonds remain under pressure, while major equities benchmarks are on track to finish the week on a positive note.

European bourses are expected to open firmer, with spreadbetters predicting the UK’s FTSE 100 will add 5 points to 6,800 and Germany’s Dax to gain 30 points to 10,716. US index futures suggest the S&P 500 will shed 3 points to 2,184, when trading gets underway later in New York.

The US dollar was still in the spotlight as it notched up one of its longest winning streaks on record. Addressing the US Congress overnight, Janet Yellen, Federal Reserve chair, said that an increase in short-term interest rates could “become appropriate relatively soon”.

Solid US inflation data also supported the case for tighter monetary policy, with markets pricing in a 96 per cent chance of rate rise in December.

The dollar index, a measure of the US currency against a basket of global peers, was up 0.3 per cent at 101.21 on Friday and eyeing a 10th straight day of gains, which would be the longest winning streak since 2012 and among the longest on record.

It is hard to ignore the impact that is having on other currencies. On Thursday, the Japanese yen passed ¥‎110 per dollar for the first time since May, and was trading 0.5 per cent weaker in Asia on Friday at ¥‎110.59.

Similarly, China’s renminbi was 0.2 per cent softer against the dollar after the country’s central bank set the band around which the currency can trade weaker for a record 11th session in a row.

Japan’s broad Topix benchmark was 0.4 per cent higher and the price-focused Nikkei 225 added 0.8 per cent as stocks have been buoyed by the weaker yen.

Australia’s S&P/ASX 200 was up 0.4 per cent, while Hong Kong’s Hang Seng rose 0.1 per cent. China’s Shanghai Composite was off 0.2 per cent, while the technology-focused Shenzhen Composite was 0.2 per cent higher.

Despite signs earlier this week that the sell-off was pausing for breath, government bonds were taking a knock on Friday.

The yield (which moves inversely to price) on 10-year Japanese government bonds was up 2.9 basis points to 0.04 per cent, the highest level since mid-February. Also under pressure were 10-year US Treasuries, with yields up 5 basis points to 2.33 per cent.

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