· The U.S. dollar strengthened across the board on Monday, as investors took heart from Friday’s strong payrolls number and improved risk appetite helped lift the greenback to a five-week high against the safe-haven yen.
The euro weakened as investors fretted over economic risks to the euro zone economy, while concerns about Britain’s plan to leave the European Union dragged the pound lower.
The dollar index, which tracks the greenback versus the euro, yen, British pound and three other currencies, was up 0.26 percent at 95.83.
Dollar sentiment has undergone a U-turn in recent days with weak European data and expanding stimulus in China boosting demand for the greenback, despite indications from the U.S. Federal Reserve that interest rate increases may be over for now.
· With much of Asia closed by holidays this week, the dollar also took heart from recently concluded trade talks between China and the United States.
· U.S. government debt yields rose on Monday as market participants pored over recent economic and labor data.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.72 percent, while the yield on the 30-year Treasury bond was also higher at 3.06 percent.
· The Federal Reserve’s new wait-and-see approach to monetary policy is suitable for now, Cleveland Fed President Loretta Mester said Monday, but the central bank may need to raise interest rates a bit further if the economy does as well as she expects.
The economy is in her view in “a very good spot,” and is likely to grow at between 2 percent and 2.5 percent this year, slower than last year but still fast enough to keep unemployment at its current level of 4percent or lower. Inflation, she predicted, would be close to the Fed’s 2-percent target.
“If the economy performs along the lines that I’ve outlined as most likely, the fed funds rate may need to move a bit higher than current levels,” she said in her prepared remarks.
But risks remain, including uncertainty over trade policy, slowing global growth, tighter financial conditions and a downturn in household confidence.
“If some of the downside risks to the forecast manifest themselves, and the economy turns out to be weaker than expected and jeopardizes our dual mandate goals, I will need to adjust my outlook and policy views,” Mester said.
· Chinese authorities' efforts to revive their country's slowing economy have been "ineffective," and it needs to do more, J.P. Morgan Private Bank's head of investment strategy for Asia said Monday.
"I still think they need to do more. I don't think they've done enough yet. So far the measures they've taken have been fairly, fairly ineffective, they haven't really produced the rebound in economic growth, and they haven't really produced the rebound in confidence either," J.P. Morgan's Alex Wolf told CNBC's "Squawk Box.
· The process of Britain leaving the European Union will not be delayed via an extension of the Article 50 exit negotiation period, British Transport Secretary Chris Grayling told the Telegraph newspaper in an interview published late Monday.
“I’ve been in every Cabinet meeting and there’s been no conversation about delaying post-March 29,” Grayling said in the interview. “We are not delaying Article 50”.
· Japanese services sector activity rose in January due to a pick-up in domestic demand, a business survey showed on Tuesday, but there are growing worries that economic activity will weaken due to the U.S.-Sino trade war.
· The U.S. special envoy for North Korea will meet with his North Korean counterpart on Wednesday in Pyongyang to prepare for a summit later this month between President Donald Trump and North Korean leader Kim Jong Un, the U.S. State Department said on Monday.
U.S. envoy Stephen Biegun said last week he aimed in working-level negotiations with his new North Korean counterpart Kim Hyok Chol to map out “a set of concrete deliverables” for the second summit between Trump and Kim.
· Oil prices fell on Monday after U.S. data sparked fresh concerns about a slowdown in the global economy and rising crude supplies in the United States.
U.S. West Texas Intermediate crude hit a 2019 high of $55.75, its best intraday price since Nov. 21. WTI ended Monday’s session 70 cents lower at $54.56 for a 1.3 percent loss.
Brent crude oil, the global benchmark, hit $63.63 a barrel, the highest since Dec. 7, before turning negative. Brent recouped most of its losses to trade 24 cents lower at $62.51 around 2:30 p.m. ET.
Weighing on oil markets, U.S. government data showed new orders for U.S.-made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment.
Prices also dipped after data showed U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose by more than 943,000 barrels in the week to Feb. 1, traders said, citing data from market intelligence firm Genscape.
Reference: CNBC, Reuters
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