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Dollar slips, oil falls

January 12, 2015

The falling price of oil has shown no sign of relenting. It dropped to a new six-year low as Asian investors adjusted to a tepid payrolls report from the US, which eliminated the dollar's recent gains against the euro.

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A man looks at an electric stock board of a securities firm in Tokyo (Photo:Itsuo Inouye/AP/dapd)
Image: AP

Commodity markets showed no sign of easing on Monday as the price of a barrel of Brent crude oil continued its downward spiral, falling 2.6 percent to $48.74 (41.27 euros), its lowest level since April 2009.

A barrel of US benchmark WTI crude cost $47.25, down 2.3 percent.

But investors were hopeful that cheaper gas could fuel more spending by consumers as the fourth-quarter earnings season gets underway.

The coming weeks are important for many retailers in the United States that will issue earnings preannouncements. The fourth quarter is among the more active as it includes the holiday shopping season.

This year, shoppers had more money to burn, thanks to a fall in energy prices. Those savings continued to be apparent on Monday.

Early retail data has already indicated strong performances by a number of American companies, including J.C. Penney, American Eagle Outfitters and Aeropostale, and analysts expect other companies could raise their business outlooks for 2015.

Retail sales are up, but wages are down

Buoyancy in the retail sector was conflated with last week's benign US jobs report. That report showed payrolls rising by 252,000 but wages defying expectations and falling by 0.2 percent, or five cents.

The US dollar dipped as Asian investors caught up with the US payroll data, falling as far as 118.92 yen first thing on Monday, before steadying at 118.30. The euro also crept up to $1.1865, leaving behind last week's nine-year low of $1.1754.

In other markets, Tokyo was closed for a holiday on Monday, so there was little market reaction to news the Japanese government is planning a record budget of more than $800 billion next year to boost the economy.

Hong Kong's key share index edged up on a declaration by Asia's richest man, Li Ka-shing, to restructure his businesses into two listed companies, one focused on property and the other on telecoms, retail and energy.

Australian shares started the new week off by shedding 0.5 percent. European equities were up on the news of industry consolidation with Shire Plc agreeing to buy NPS Pharmaceuticals for $5.2 billion.

cjc/sgb (Reuters, dpa)