Euro falls on way to worst quarter; dollar best since 2008

(Reuters) – The euro fell to a 10-day low against the dollar on Tuesday, putting it on track for the worst quarter in its 15-year history, as investors renewed bets the U.S. Federal Reserve would raise rates later this year while the European Central Bank moves to boost the euro zone economy.

The euro has fallen 11 percent against the dollar in the first quarter of 2015, driven by the ECB starting a 1.1-trillion-euro bond purchase program in a bid to avert deflation spreading across the euro zone.

The euro has faced added selling pressure as Greece and its lenders have failed to strike a deal on reforms.

“There’s not a lot of resolution with Greece’s situation. That’s keeping the euro from any kind of a short-term rebound,” said Mark McCormick, currency strategist at Credit Agricole in New York.

Meanwhile, the dollar index .DXY, which gauges the greenback against a basket ofcurrencies, has risen 9 percent since January and is poised for the strongest quarter since the third quarter of 2008.

“It’s hard to bet against the U.S. currency right now as the fundamental backdrop augurs for higher U.S. interest rates,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The greenback got a further boost on Tuesday from month-end rebalancing flows and upbeat readings on U.S. consumer confidence and home prices, traders said.

The dollar index was up 0.4 percent at 98.33, just below a 12-year high of 100.39 set earlier in March.

The greenback dipped 0.1 percent against the yen .JPY at 119.93 yen, leaving its gain for the quarter at 0.4 percent.

The euro EUR= was last down 0.8 percent against the dollar at $1.0746 – above the 12-year trough of $1.0456 set on March 16, according to Reuters data.

The single currency was down 0.9 percent at 128.86 yen EURJPY=, bringing its quarter-to-date loss to 11.3 percent.

Analysts said the dollar’s near-term strength would hinge largely on the March payrolls numbers due on Friday ECONUS.

Signs of further improvement in the U.S. jobs market will likely reinforce the view the Fed would end its near zero interest rate policy later this year, propelling the dollar and U.S. yields higher, analysts said.

Source: Reuters

U.S. top court says medical providers can’t sue states over Medicaid funding

(Reuters) – The U.S. Supreme Court on Tuesday ruled in a case from Idaho that private medical providers that deliver residential care services cannot sue a state in try to raise Medicaid reimbursement rates to deal with rising medical costs.

The justices, on a 5-4 vote, ruled in favor of the state of Idaho, which asserted that medical providers have no legal recourse to sue. The ruling is a loss for the healthcare industry, with trade groups and the U.S. Chamber of Commerce backing the providers in the case.

Medicaid is a federal health insurance program for lower-income people that is administered by the states. Idaho’s lawyers said that in order to receive Medicaid funding, they are required only to comply with the Medicaid Act and related regulations.

The case focused on rates for certain residential services.

State officials recommended increases in reimbursement rates in the late 2000s but they were never implemented because the Idaho legislature declined to appropriate funds, according to court papers.

The providers sued the state in 2009, accusing it of maintaining reimbursement rates that were too low and did not keep up with their rising costs for delivering medical care.

Writing on behalf of the majority, Justice Antonin Scalia said that providers have no right to sue the state under what is known as the Supremacy Clause of the U.S. Constitution, which holds that federal law generally trumps state law.

The clause “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court,” Scalia wrote.

Scalia noted that the providers have another option: they can ask the federal government to intervene on their behalf.

In a dissenting opinion, Justice Sonia Sotomayor said the ruling would have “real consequences” because previously when a state set rates too low, it could be held accountable by the providers directly affected.

The federal government’s only real recourse is “through the drastic and often counterproductive measure of withholding the funds that pay for such services,” Sotomayor added.

The medical providers had noted that similar litigation in other states, including Illinois and Oklahoma, has been allowed ever since Medicaid was introduced in 1965.

The 9th U.S. Circuit Court of Appeals ruled in 2013 that the providers could sue.

The high court split along non-ideological lines. Liberal Justice Stephen Breyer joined four conservatives in the majority. Conservative Anthony Kennedy joined the other liberals in dissent.

Source: Reuters

Stocks slide, oil prices jump after Yemen air strikes

(Reuters) – Oil prices jumped 5 percent and stock markets worldwide slumped on Thursday after Saudi Arabia and allies carried out air strikes in Yemen, which fueled worries in the Middle East that energy shipments may be put at risk.

Wall Street steadied in late trading, narrowing losses that had been as much as 1 percent to close just modestly lower with support from economic data and corporate earnings reports.

“The air strikes in Yemen have really created a risk-off mood,” said Rabobank strategist Philip Marey.

Brent oil LCOc1 closed up nearly 5 percent at $59.19 a barrel, but off a session high of $59.78. U.S. crude CLc1 closed up 4.5 percent at $51.43 a barrel after reaching $52.48.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 countries, was last off 0.80 percent.

In currency markets, the dollar fell against traditional safe havens the Swiss franc and the yen after warplanes from Saudi Arabia and other Arab countries struck Shi’ite Muslim rebels fighting to oust Yemen’s president.

The dollar later recovered against the franc CHF= and was last up 0.4 percent at 0.9633 francs. Against the yen, the dollar was last at 119.26 yen JPY=, off 0.18 percent.

The dollar was down earlier against the euro EUR=RR but recovered in New York trading on the view that central bank policy was more favorable for the U.S. currency. The euro was last off 0.80 percent at $1.0884.

Iran denounced the attacks as the Saudi military also targeted Iran-backed Houthi rebels besieging the southern Yemen city of Aden. Arab producers ship oil via the narrow Gulf of Aden and the prospect of bigger Middle East conflict sparked fears of a disruption of crude supplies.

A vertiginous slide in oil prices from more than $115 a barrel last June to a low of $45 in January has been a major driver of financial markets and a key factor driving global interest rates down and stock markets up.

The pan-European FTSEurofirst 300 index .FTEU3 closed down 0.8 percent. In Germany, a major industrial economy heavily dependent on oil imports, the DAX index .GDAXI ended off 0.2 percent.

Wall Street’s Dow Jones industrial average .DJI closed off 40.31 points, or 0.23 percent, to 17,678.23, the S&P 500 .SPX lost 4.9 points, or 0.24 percent, to 2,056.15 and the NasdaqComposite .IXIC dropped 13.16 points, or 0.27 percent, to 4,863.36.

Gold rose, climbing 0.75 percent to $1,203.20 an ounce XAU=, supported by the weak dollar and Middle East tensions.

Yields on U.S. Treasuries, often a safe haven for fretful investors, rose as the government held a sale of $29 billion of Treasury notes that met with soft demand. The benchmark 10-year note US10YT=RR was off 25/32 and yielded 2.0069 percent, compared to 1.92 percent on Wednesday.

Source: Reuters