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World stocks set for biggest weekly loss in a month, dollar climbs before U.S. payrolls

LONDON (Reuters) – World stocks were set for their biggest weekly loss since the middle of March on Friday, while the dollar hovered near highs hit on its recent rally as investors awaited jobs data from the United States.

The MSCI All-Country World Index.MIWD00000PUS, a gauge of stocks across 47 countries, was up less than 0.1 percent on the day. It was set for a 1.2 percent loss this week, its highest since the week ended March 23.

Gains in Europe outweighed earlier losses in Asia, where Indonesian stocks .JKSE sank as Japan was closed for a holiday. Broad-based gains in European banking stocks.SX7P helped lift the pan-European STOXX index 0.3 percent.

Meanwhile, the dollar rose against a basket of currencies .DXY, hugging recent highs posted on the back of a sharp rally that has fully reversed its 2018 losses. The currency was set for its third week of gains.

Analysts at ING reckon the dollar’s recent reversal is likely to be short-lived.

“When dissecting the anatomy of this dollar correction, we feel it exhibits all the hallmarks of a short squeeze. Positioning had clearly been stretched,” they wrote in a research note.

While short dollar bets have receded somewhat, they are still holding near a record $28 billion registered in late April. Bearish dollar bets have ballooned rapidly over the last year on expectations that Europe and the UK will start normalizing monetary policy as growth momentum spreads.

source :

Michael V.

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