• The dollar rose on Monday against a basket of currencies as U.S. bond yields climbed and traders waited for a Federal Reserve meeting and a U.S. jobs report later in the week, while the euro and pound were both down.
Against a basket of currencies, the dollar index .DXY rose 0.28 percent to 89.319 as of 3:41 p.m. ET (2041 GMT).
After six straight weekly declines, the greenback was on track to fall 3 percent for the month.
On Monday the euro slid to $1.2335, its session low, before paring losses later in the day. It last fell 0.27 percent to $1.2386. The British pound last decreased 0.67 percent.
• U.S. Treasury yields surged to more than three-year highs on Monday after comments from a European Central Bank official added to expectations that central banks globally will reduce stimulus as the economic outlook improves.
Ten-year note yields reached a peak of 2.727 percent, the highest since April 2014. The notes were last down 11/32 in price to yield 2.701 percent.
• Traders are feeling some uncertainty going into this week’s Fed meeting, said Douglas Borthwick, managing director and head of FX at Chapdelaine Foreign Exchange in New York.
“Depending on the new Fed leadership, which is being run now by (Jerome) Powell, the market is concerned about whether we’re going to see continued rate rises at the current velocity that’s expected or whether it’s going to be increased somewhat,” he said.
• Reuters data points to market expectations of about three more Fed rate hikes this year, starting in March, although some analysts, including at Goldman Sachs and JP Morgan Asset Management, expect the Fed to raise rates four times.
• U.S. interest rates futures edged lower on Friday as traders anticipated risk the Federal Reserve may increase key short-term borrowing costs four times in 2018 on expectations of rising domestic inflation and an improving global economy.
At 8:50 a.m. (1350 GMT), federal funds futures FFZ8 FFF9 implied traders saw a 26 percent chance of the Fed hiking rates four times this year, compared with 23 percent at Friday’s close and 10 percent a month earlier, CME Group’s FedWatch program showed.
• Some economists expect the Federal Reserve to raise its economic assessment when it concludes its two-day meeting on Wednesday. That could increase the probability that the U.S. central bank raises interest rates four times this year.
• Traders also awaited a U.S. Department of Labor report to be released on Friday, that will include data on nonfarm payrolls, average hourly earnings and the unemployment rate. BK’s Lien said she expects wage growth could slow.
• U.S. consumer spending rose solidly in December as demand for goods and services increased, but the gain came at the expense of savings, which dropped to a 10-year low in a troubling sign for future consumption and economic growth.
The Commerce Department said on Monday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month after an upwardly revised 0.8 percent increase in November.
Last month’s increase was in line with economists’ expectations. Spending was previously reported to have risen 0.6 percent in November.
Savings fell to $351.6 billion in December from $365.1 billion in the prior month. Savings declined to $485.8 billion in 2017, the lowest level since 2007, from $680.6 billion in 2016.
The saving rate dropped to 2.4 percent, the lowest level since September 2005, from 2.5 percent in November. It decreased to 3.4 percent in 2017, a 10-year low, from 4.9 percent in 2016.
• As the U.S. Congress limps toward the likely passage next week of another stopgap spending bill to avert a government shutdown, a Washington think tank has estimated the federal budget deficit is on track to blow through $1 trillion in 2019.
• U.S. President Donald Trump’s trade chief rejected Canadian proposals for unblocking NAFTA modernization talks on Monday but pledged to seek “breakthroughs” by late February, easing concerns that Washington would soon withdraw from the trilateral pact.
U.S. Trade Representative Robert Lighthizer said after a sixth round of NAFTA negotiations in Montreal that Trump’s views on the pact are unchanged, and cautioned that talks are still moving too slowly on U.S. priorities.
• The U.S. House Intelligence Committee voted along party lines on Monday to release a classified memorandum that Republicans say shows anti-Trump bias at the Justice Department, the committee’s top Democrat said.
FBI Deputy Director Andrew McCabe, criticized by President Donald Trump and other Republicans for alleged bias against him and in favor of his2016 Democratic opponent Hillary Clinton, has stepped down, U.S. officials confirmed on Monday.
• The leader of Germany’s Social Democrats (SPD) played down hopes on Monday for swift progress in coalition talks with Chancellor Angela Merkel’s conservatives, an SPD source said, amid continued disagreement over several issues including refugees.
• Oil prices settled lower on Monday, pressured by a strengthening dollar and rising U.S. crude output, but prices remained on track for the biggest January increase in five years.
Brent crude futures LCOc1 for March delivery settled down $1.06, or 1.5 percent, at $69.46 a barrel, after rallying to a session high of $70.64.
U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 58 cents, or 0.9 percent, to close at $65.56 a barrel.
Reference: Reuters
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