• The U.S. dollar was slightly lower against the Japanese yen on Monday, as investors braced for the possibility that the Bank of Japan will announce changes to its monetary easing policy on Tuesday at the conclusion of a two-day meeting.
The dollar was 0.05 percent lower against the yen at 110.98 yen.
• “I think there is some nervousness ahead of tomorrow’s results of the BoJ meeting,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
• The BoJ will consider changes to its massive stimulus program to make it more sustainable, such as allowing greater swings in interest rates and widening its stock-buying selection, Reuters reported last week, citing people familiar with the central bank’s thinking.
The changes, although small, would be the first since 2016 and the latest sign Governor Haruhiko Kuroda is gradually walking away from his radical stimulus program deployed five years ago to shock the public out of a persisting deflationary mindset.
• “While I do think the knee jerk will be JPY stronger, USD/JPY lower, I think this is such a consensus trade now that it will be hard for the pair to run for very long,” Brad Bechtel, managing director, at Jefferies in New York, said in a client note.
• The euro’s gains follow a sharp decline last week after the European Central Bank reaffirmed that rates would stay low through the summer of 2019. Analysts said the rebound was largely because traders felt it had been oversold last week.
• The U.S. dollar index .DXY, which measures the greenback against a basket of six currencies, was down 0.38 percent at 94.316, ahead of economic data and central bank monetary policy meetings this week.
Investors do not see the Fed raising interest rates this week. U.S. economic data this week, including data on payrolls, is also in focus, analysts said.
• The ECB, which targets inflation at just below 2 percent, decided on Thursday to stay on course to end asset purchases this year and hike rates by late 2019. The bank is satisfied that a five-year growth run will push price growth higher but also has concerns that a global trade war could unravel the expansion.
Headline inflation is seen at 1.7 percent this year, above a previous projection for 1.5 percent, while next year’s rate is also seen at 1.7 percent, above the 1.6 percent projected three months ago, according to the survey of 56 forecasters, an important input in the ECB’s policy deliberations.
For this year, the growth projection was cut to 2.2 percent from 2.4 percent while for next year, it was reduced to 1.9 percent from 2 percent. Over the long-term, growth is seen at 1.6 percent.
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• Gross domestic product grew at a solid 4.1 percent pace in the second quarter, its best pace since 2014, boosting hopes that the economy is ready to break out of its decade-long slumber.
• Contracts to buy previously owned homes unexpectedly rose in June after two straight monthly declines, but the housing market remains hobbled by a dearth of properties available for sale.
The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, increased 0.9 percent to a reading of 106.9.Economists polled by Reuters had forecast pending home sales unchanged in June.
• A no-deal Brexit is not an option for Britain’s car industry, given the costs and disruption that carmakers and consumers would suffer, the head of the country’s automobile industry group said on Tuesday.
• Canada, the European Union, Japan, Mexico and South Korea will meet in Geneva next week to discuss how to respond to threats by U.S. President Donald Trump to impose tariffs on U.S. imports of autos and car parts, officials familiar with the talks said.
• U.S. President Donald Trump threatened again on Monday to shut down the federal government over his demands for a border wall and other changes in immigration policy, but said he remains open to talks with Congress on the issue.
Congress must pass a spending bill by the end of September to avert a government shutdown, and Trump on Monday reiterated his demand that immigration reforms, including $25 billion for construction of a wall on U.S. border with Mexico, be included in any spending package.
• U.S. President Donald Trump said on Monday he would be willing to meet Iran’s leader without preconditions to discuss how to improve ties after he pulled the United States out of the 2015 Iran nuclear deal, saying, “If they want to meet, we’ll meet.”
• U.S. spy satellites have detected renewed activity at the North Korean factory that produced the country’s first intercontinental ballistic missiles capable of reaching the United States, a senior U.S. official said on Monday, in the midst of talks to compel Pyongyang to give up its nuclear arms.
Photos and infrared imaging indicate vehicles moving in and out of the facility at Sanumdong, but do not show how advanced any missile construction might be, the official told Reuters on condition of anonymity because the intelligence is classified.
• Oil prices rose on Monday, with U.S. crude futures jumping more than 2 percent, as traders continued to focus on supply disruptions and a possible hit to crude output from U.S. sanctions on Iran.
October Brent crude futures LCOV8, the most actively traded contract, settled at $75.55 a barrel, up 79 cents. The September Brent contract, which expires on Tuesday, settled at $74.97, up 68 cents, or 0.9 percent. Volumes in an expiring contract tend to dwindle in the last few days before it goes off the board.
U.S. West Texas Intermediate crude futures (WTI) CLc1 rose $1.44, or 2.1 percent, to settle at $70.13 a barrel.
WTI rose on expectations that U.S. inventories fell last week and worries that an outage at a Syncrude facility in Canada will not be solved as soon as expected, traders said.
Reference: Reuters, CNBC
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