The U.S. dollar touched a 14-year high boosted by strong data, while upbeat figures out of China and Europe lifted debt yields and major stock markets got off to a higher start in the new year.
Crude oil gave up a 2-percent advance and was trading negative, weighed by the strong dollar, as U.S. factory activity accelerated to a two-year high in December amid a surge in measures of new orders and employment.
Inflation rose in Germany and France, providing the euro zone bank with evidence its loose monetary policy is working, while Chinese data showed the fastest factory output growth in six years.
On Wall Street, stocks rose on the upbeat data, with the Nasdaq Composite hitting a record intraday high and both the S&P 500 and Dow industrials not far from their historic highs.
The Dow Jones Industrial Average .DJI rose 25.05 points, or 0.13 percent, to 19,787.65, the S&P 500 .SPX gained 8.02 points, or 0.36 percent, to 2,246.85 and the Nasdaq Composite .IXIC added 18.50 points, or 0.34 percent, to 5,401.62.
The pan-European FTSEurofirst 300 index .FTEU3 rose 0.53 percent, while MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 0.14 percent.
The dollar .DXY rose boosted by the strong U.S. data and on continued bets that the Federal Reserve will have to raise rates this year to keep up with inflation and growth brought by a planned fiscal stimulus from the incoming Trump administration.
“Job growth appears to be picking up, orders are picking up quite strongly, prices are increasing quite strongly as well,” said Shaun Osborne, currency strategist at Scotia Capital in Toronto.
“That suggests the (Federal Reserve) is going to have to remain active in this kind of environment. So this on the whole is a generally constructive set of data for the dollar here in a time of the year where typically the dollar does quite well.”
The dollar index .DXY gained 0.84 percent. The euro fell 0.32 percent to $1.0424 and the pound dropped 0.13 percent to $1.2259.
Benchmark U.S. Treasury yields rose as traders sought risk.
The 10-year U.S. Treasury yield hit a session high at 2.518 percent. Benchmark 10-year notes US10YT=RR last fell 7/32 in price to yield 2.4573 percent.
Oil prices fell after hitting an 18-month high. Traders said crude prices were buoyed earlier in the day by hopes that a deal between OPEC and other big oil exporters to cut production, which kicked in on Sunday, will drain a global supply glut.
“The dollar strength is certainly weighing on oil prices,” said Andrew Lipow, president of energy consulting firm Lipow Oil Associates in Houston.
U.S. crude CLc1 last fell 2.4 percent to $52.42 a barrel and Brent LCOc1 traded at $55.55, down 2.2 percent on the day.
Spot gold XAU= gained 0.9 percent to $1,162.16 an ounce. U.S. gold futures GCcv1 rose 1.0 percent to $1,163.00 an ounce.