MTS Help Center

 

·         The dollar advanced to a five-month high against a basket of currencies on Monday, as news of a truce between the United States and China on trade tariffs prompted investors to pare back short positions on the greenback.

Investors have been short the dollar since July of last year, but the dollar index .DXY has rallied nearly 7 percent since mid-February. The dollar has been mainly bolstered by generally solid U.S. economic data that has backed the Federal Reserve’s monetary policy tightening stance this year.

The prospect of a resolution to the U.S.-China trade tensions has further added to the dollar’s shine.

In late trading, the dollar index rose 0.1 percent to 93.681 after earlier hitting a five-month high above 94.

·         This week, the dollar’s fate rests on the Fed, with several of its officials speaking and the minutes of the U.S. central bank’s last monetary policy meeting due to be released on Wednesday.

·         Investors will focus on the Fed’s inflation outlook. Higher inflation could mean faster interest rate hikes and a stronger dollar.

·         In other currency pairs, the dollar rose to a four-month high against the yen JPY= at 111.39 and was last at 111.10, up 0.3 percent. The yen has been pressured by recent weaker Japanese data, a U.S.-China trade war truce and elevated U.S. Treasury yields, analysts said.

·         The euro, meanwhile, was flat against the dollar at $1.1775 EURO=, after earlier falling to its lowest level since around mid-November. Europe’s single currency has been affected by concerns about political uncertainty in Italy.

This week will bring about a further test for stubborn euro bulls with the release of May flash PMI data on Wednesday, with markets waiting to see whether the first-quarter slowdown in Europe has spilled over to subsequent months.

·         Atlanta Federal Reserve Bank President Raphael Bostic said on Monday the U.S. economy is close to meeting the Fed’s employment and inflation goals, with growth of around 2.5 percent expected this year.

·         China has pledged to buy more U.S. goods to reduce America’s huge trade deficit and help avoid exacerbating a trade war between the world’s two biggest economies, with energy and commodities high on Washington’s list of products for sale.

·         Three weeks before an unprecedented U.S.-North Korea summit is supposed to take place, President Donald Trump will meet South Korean President Moon Jae-in on Tuesday as U.S. officials try to figure out whether Pyongyang is serious about negotiating a deal on denuclearization.

Moon’s White House visit was originally arranged as a meeting to fine-tune a joint strategy for dealing with North Korean leader Kim Jong Un but has instead become more of a crisis session after Pyongyang last week threatened to pull out of the planned June 12 summit in Singapore.

Trump has insisted he remains committed to the summit, but Vice President Mike Pence warned on Monday that the president was still willing to walk away from the meeting, telling Fox News that North Korea should not attempt to seek concessions for promises it did not intend to keep.

·         The European Union and South America’s Mercosur bloc could reach a trade agreement this year, the president of the European Council said on Monday, following tensions between the two regional blocs during negotiations last month.

“We think we’re going to end negotiations toward the end of the year,” said Ekaterina Zaharieva, the foreign affairs minister for Bulgaria, which now holds the rotating presidency for the EU.

·         Representatives of Argentina, Canada, Australia, Mexico, Chile, and the United States said in a joint statement on Monday they would not recognize the result of Venezuela’s presidential election held on Sunday.

“Taking into account the lack of legitimacy of the electoral process we do not recognize the results of (Sunday’s) election ... which excluded the participation of some political actors,” said Argentina’s Foreign Minister Jorge Faurie.

·         U.S. crude hit its highest level since 2014 on Monday amid rising concerns that Venezuela’s oil output could fall further following the country’s presidential election and potential sanctions on the OPEC-member nation.

·         Prices firmed further as U.S. President Donald Trump had discussions with Russia and China about issuing new debt to Venezuela. Trump signed an executive order on Monday restricting Venezuela’s ability to liquidate state assets, a senior administration official told reporters.

Any restriction on Venezuela’s financing, logistics or power supply could further depress the country’s crude output.

U.S. crude futures settled 96 cents, or 1.4 percent, firmer at $72.24 a barrel, after touching $72.33, the highest since November 2014. In post-settlement trade, the benchmark hit a fresh 3-1/2year high at 72.59.

Brent crude futures gained 71 cents, or 0.9 percent, to settle at $79.22 a barrel. In post-settlement trade, the global benchmark rallied to $79.59, up more than a dollar from the previous close.

·         Venezuela on Monday said new U.S. sanctions restricting its ability to liquidate state assets and debt in the United States were “illegal measures.”

“(The sanctions) are madness, barbaric, and in absolute contradiction to international law,” Foreign Minister Jorge Arreaza said in a short statement at the Miraflores presidential palace.

In response to Venezuelan President Nicolas Maduro’s re-election on Sunday, U.S. President Donald Trump issued an executive order, the latest in a series of sanctions that seeks to choke off financing for the already cash-strapped government.

 

Reference: Reuters