The dollar index .DXY, which measures the greenback against a basket of six currencies, was up 0.44 percent at 94.166, after hitting a high of 94.249, its strongest since mid-November. The index was up 0.6 percent for the week.
Spain’s socialist leader Pedro Sanchez on Friday said his party would call a snap election if it won the motion it put forward against Prime Minister Mariano Rajoy over a graft case involving members of his People’s Party.
The euro was 0.35 percent higher at $1.1693 after falling on Friday to $1.1646, its lowest since mid-November, losing more than 1 percent on the week.
· The news sparked a sharp sell-off in Spanish bonds and stocks, and provided investors with a fresh incentive to get out of Italian assets, which have been rattled by the prospect of a spendthrift coalition government comprising the anti-establishment 5-Star Movement and far-right League.
· The Federal Reserve plans to continue tightening monetary policy gradually for now, but it faces a much tougher decision as U.S. interest rates near a “neutral” level where they neither boost nor slow the economy, several policymakers indicated on Friday.
“I’m not yet there on what we should do once we get to neutral,” Dallas Fed President Robert Kaplan said at a conference where Atlanta Fed President Raphael Bostic and Chicago Fed President Charles Evans also spoke.
“I think we are going to have quite an agonizing debate for lots of reasons, including the shape of the yield curve.”
His comments illuminated tensions over the next stage in the Fed’s long march to more normal interest rate levels. With the unemployment rate near a 17-1/2-year low of 3.9 percent and inflation close to the Fed’s 2 percent target, policymakers want a rate hike path that keeps the economy from overheating without triggering a recession.
· Fed Chairman Jerome Powell assessed the state of banking regulations in a speech Friday at the Riksbank in Stockholm. He pledged that the U.S. central bank will continue to "assess the efficacy and efficiency of post-crisis reforms."
Powell's speech offered no further information about monetary policy or how he feels about interest rates.
· U.S. President Donald Trump said on Saturday he was still looking at a June 12 summit with North Korean leader Kim Jong Un in Singapore, adding that talks were progressing very well.
U.S. President Donald Trump said on Sunday a U.S. team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un, which Trump pulled out of last week before reconsidering.
Earlier, the U.S. State Department said U.S. and North Korean officials had met at Panmunjom, a village in the Demilitarized Zone (DMZ) that runs along the heavily armed border between North and South Korea.
“Our United States team has arrived in North Korea to make arrangements for the Summit between Kim Jong Un and myself,” Trump wrote on Twitter, in Washington’s first confirmation that U.S. officials had entered North Korea for the talks.
· North and South Korea are discussing a possible non-aggression pledge by the United States to the North and a start of peace treaty talks to address Pyongyang’s security concerns before a North Korea-U.S. summit, a senior South Korean official said on Sunday.
North Korean leader Kim Jong Un reaffirmed his commitment to “complete” denuclearisation of the Korean peninsula and to a planned meeting with U.S. President Donald Trump, South Korean President Moon Jae-in said on Sunday.
· China’s Foreign Ministry said on Sunday it hoped a summit between U.S. President Donald Trump and North Korean leader Kim Jong Un, originally set for Singapore next month, could happen as planned and be successful.
· Profits earned by Chinese industrial firms in April rose at their fastest pace in six months, data from the National Bureau of Statistics (NBS) showed on Sunday, as factories benefited from higher prices and strong demand.
Profits in April rose 21.9 percent year-on-year to 576 billion yuan ($90.14 billion), the quickest since October, bringing gains for the first four months of 2018 to 15 percent.
The data suggests China’s industrial sector is still seeing solid growth momentum despite curbs on pollution and rocky trade relations with the United States.
· Efforts to form a coalition government collapsed on Sunday after the Italian president rejected a eurosceptic pick for the key economy ministry, triggering a possible constitutional crisis and opening the prospect of fresh elections.
Looking to allay investor concerns, Mattarella vetoed on Sunday the choice of 81-year-old economist Paolo Savona, a vocal critic of the single currency, to the pivotal economy post.
Prime Minister-designate Giuseppe Conte promptly abandoned his efforts to form a government.
· British Prime Minister Theresa May faces a showdown with ministers and lawmakers in her Conservative party after refusing to back reform of Northern Ireland’s highly restrictive abortion rules after neighboring Ireland’s vote to liberalize its laws.
· Growing expectations of increased oil supply hit crude prices on Friday, lifting the U.S. dollar and weighing on energy shares, while political upheaval in Europe and uncertainty over a U.S.-North Korea summit restrained equity markets.
Brent crude futures fell $2.35, or 3 percent, to settle at $76.44 a barrel after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014.
The global benchmark lost about 2.7 percent this week, its largest weekly drop since early April. The contract hit its highest since late 2014 at $80.50 last week.
U.S. West Texas Intermediate (WTI) crude CLc1 slumped $2.83, or 4 percent, to finish at $67.88 a barrel. For the week, WTI tumbled about 4.9 percent, its biggest loss since early February, a sharp course reversal after six weeks of gains.
· A return to the oil production levels that were in place in October 2016, baseline for the current deal to cut output, is one of the options for easing curbs, Russia’s energy minister said on Saturday.
“When we extended the agreement until the end of 2018, we spoke about such possibilities (of returning to the October 2016 level),” Novak told reporters.
“But a decision will be made in June,” he added, referring to meetings of OPEC and non-OPEC countries in Vienna on June 22-23.
Reference: Reuters, CNBC
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