• The dollar index fell as low as 92.243 on Monday, the lowest since May 2, before rising back to 92.619, up 0.09 percent on the day. It has dropped from 93.416last Wednesday, the highest since Dec. 22.
The dollar rose on Monday, erasing earlier losses, as investors questioned whether a rally that last week sent the greenback to more than four-month highs had run out of steam.
• Investors are focussed this week on speeches by Fed and ECB officials, as well as German data on Tuesday that is expected to show some slowdown in economic growth.
• The Federal Reserve should continue its gradual approach to raising interest rates given that inflation has not yet reached the U.S. central bank's 2 percent goal in a sustained way, Cleveland Fed President Loretta Mester said on Monday.
"In my view, the medium-run outlook supports the continued gradual removal of policy accommodation; it seems the best strategy for balancing the risks to both of our policy goals and avoiding a build-up of financial stability risks," Mester said in prepared remarks for a speech in Paris.
• The growth of bitcoin and other digital currencies is working against the need for the creation of a market-based currency-trading system that offers consistent pricing, James Bullard, the head of the St. Louis Federal Reserve Bank, said on Monday.
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• Trader expectations that the Fed will raise rates in June is 100 percent, according to CME Group's FedWatch Tool. For a rate hike in September, the current probability is 73.6 percent, while the market remains divided over whether the Fed will make a fourth rate hike at the December meeting.
• President Donald Trump asked Commerce Secretary Wilbur Ross to look into U.S. restrictions placed on Chinese telecommunication company ZTE Corp (000063.SZ), a
White House spokesman said on Monday, calling the limits “an issue of high concern for China.”
• President Donald Trump on Monday defended his decision to revisit penalties for Chinese company ZTE Corp for flouting U.S. sanctions on trade with Iran, saying the telecom maker is a big buyer for U.S. suppliers.
Trump, known for his fiery rhetoric against Chinese trade practices he says hurt U.S. jobs, faced backlash from both Republican and Democratic lawmakers after he pledged to work with Chinese President Xi Jinping to help ZTE, saying too many jobs in China had been lost.
• Donald Trump’s surprise reprieve for ZTE Corp has paved the way for a Chinese delegation’s arrival in Washington this week for at least three days of talks aimed at averting a trade war, according to people briefed on the discussions.
China’s foreign ministry confirmed on Monday that vice-premier Liu He would travel to Washington on Tuesday, less than 24 hours after the US president ordered his commerce department to help the Chinese telecommunications company “get back into business, fast”.
• Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated, while U.S. crude’s discount to global benchmark Brent widened to more than $7, its deepest in five months.
Global benchmark Brent gained $1.11 to settle at $78.23 a barrel. West Texas Intermediate crude rose 26 cents to settle at $70.96.
WTI’s discount to Brent was as much as $7.28, its widest since Dec. 12 on surging U.S. output.
U.S. shale production is expected to hit a record 7.18 million barrels per day (bpd), the Energy Information Administration said.
• A dramatic upswing in oil prices over recent months could soon create a "particularly hostile environment" for global investors, Citi economists warned Monday.
The price of crude has risen over the past two years, from $26 in 2016 to $77 on Monday, as the balance between supply and demand has been steadily tightening. This has helped boost company's profits too — with several oil and gas producers and refiners among the biggest gainers on Wall Street over the past month.
However, President Donald Trump's decision to pull the U.S. out of the Iran nuclear deal "constitutes a major geopolitical shift" which could trigger a move in the direction of "stagflation," a global strategy team at Citi, led by Mark Schofield, said in a research note published Monday.
Reference: Reuters, Financial Times, CNBC
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