• The dollar fell on Monday as investors pared long bets on the greenback and rebalanced their positions ahead of Federal Reserve Chairman Jerome Powell’s first congressional testimony.
Powell will testify on the economy and monetary policy before the U.S. Senate Banking Committee on Tuesday, followed by testimony on Wednesday to the House of Representatives Financial Services Committee. He is likely to reiterate the Fed’s gradual monetary policy tightening, although any suggestion of caution on trade could unravel the market’s appetite for risk, analysts said.
Doyle said he will be interested to see if Powell makes any comments on global trade tensions and how that would affect the outlook for interest rates.
The dollar has benefited from expectations of further interest rate increases this year as well as a growing belief that the United States is better placed than its major rivals to withstand a potential disruption in global trade.
• Outstanding U.S. dollar bets are at their highest levels since March 2017, with the latest weekly data showing yet another increase in positions. Speculators were net long dollars for a fourth consecutive week, after being net short for 48 straight weeks.
In late trading, the dollar fell 0.2 percent against a basket of six major currencies to 94.526 , sliding for a second straight session.
The dollar briefly pared losses after data showed U.S. retail sales rose 0.5 percent in June, as households boosted purchases of automobiles and a range of other goods.
The euro, meanwhile, rose 0.2 percent against the dollar, to $1.1708, after weakening half a percent last week.
• U.S. retail sales rose solidly in June as households boosted purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter.
• The narrowing gap between yields on long-term and short-term Treasury bonds to little more than the equivalent of one rate hike from the Federal Reserve has helped sour at least one U.S. central banker on any further interest rates increases.
Minneapolis Federal Reserve Bank President Neel Kashkari, who does not vote this year on Fed policy but takes part in the U.S. central bank’s regular discussion of interest-rate policy, said Monday that the flat yield curve means interest rates are close to neutral.
“This suggests that there is little reason to raise rates much further, invert the yield curve, put the brakes on the economy and risk that it does, in fact, trigger a recession,” he said in a blog post. “If inflation expectations or real growth prospects pick up, the Fed can always raise rates then.”
• The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey following U.S. duties on steel and aluminum.
The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement.
• Standing side by side with Vladimir Putin, U.S. President Donald Trump refused on Monday to blame the Russian leader for meddling in the 2016 U.S. election, casting doubt on the findings of his own intelligence agencies and sparking a storm of criticism at home.
On a day when he faced pressure from critics, allied countries and even his own staff to take a tough line, Trump spoke not a single disparaging word in public about Moscow on any of the issues that have brought relations between the two powers to the lowest ebb since the Cold War.
Instead, he denounced the “stupidity” of his own country’s policies, especially the decision to investigate Russian interference in the 2016 election.
• Prime Minister Theresa May won a series of votes in parliament on Monday, keeping her over-arching strategy to leave the European Union just about on track after bowing to pressure from Brexit supporters in her party.
But by accepting the demands of hardline Brexit campaigners, she exposed her vulnerability in parliament, where both wings of her Conservative Party attacked each other, highlighting the deep divisions that have so far hampered progress in talks with the EU.
• Oil prices slumped more than 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers.
Brent crude LCOc1 futures fell $3.49 to settle at $71.84 a barrel, a 4.63 percent loss, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $2.95 to settle at $68.06 a barrel, a 4.15 percent loss.
Brent’s dive pushed it to a session low of $71.52 during the session, its lowest since mid-April.
Reference: Reuters
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