MTS Help Center

· The dollar licked its wounds on Monday after soft U.S. data increased bets the Federal Reserve will cut rates later this year while the pound hovered near nine-months high on hopes for a delay in Britain’s exit from the European Union.

The dollar’s index against a basket of six major currencies edged down 0.1 percent to 96.481, after having shed 0.81 percent last week, the biggest loss since late August.

The 10-year Treasuries yield fell to as low as 2.580 percent, its lowest since Jan. 4, while Fed funds futures priced in about 40 percent chance of a rate cut this year, compared with almost zero percent seen earlier this month.

· “The 10-year yield closed below 2.6 percent, for the second time this year after closing below that level only on one day at the beginning of year,” said Chotarto Morita, chief strategist at SMBC Nikko Securities.

“If it stays below that level sustainably, it will be the first time since January 2018, when yields started rising on expectations of accelerating growth and inflation following tax cuts. Yields are slipping back as U.S. economic sentiment is cooling down,” he said.

· Against this background, many investors expect the Fed to suggest rates will be on hold in the near future and to unveil a plan to end its balance sheet runoff later this year in its meeting ending on Wednesday.

“The focus is on how dovish the Fed will be. I got the impression that markets have gone a bit too far in expecting rate cuts. There’s a risk such views will be rolled back if the Fed’s dot plots show the board members still expect a rate hike this year,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

· As the dollar loses steam, other major currencies rose by default. The euro inched up to $1.1336, flat in early Monday trade having gained0.86 percent, the biggest weekly gain since late September.

· The dollar fetched 111.50 yen, little changed on the day but off Friday’s nine-day high of 111.90.

· EUR/USD Technical Analysis: Euro Down Trend Expected to Resume

The Euro is back to testing resistance guiding it lower against the US Dollar since January 2018, a barrier reinforced by the top of a choppy channel in play over the past two months. Another rejection might open the door for the next leg in the single currency’s slow downward grind while a break higher has might set the stage for a significant medium-term trend reversal.

· There is virtually no chance the US Federal Reserve will raise interest rates in the coming week, since policymakers have all but promised to hold their fire as the global economy slows.

With inflation still tame as US economic growth decelerates in 2019, economists also say Fed officials will once again lower the number of rate hikes they expect this year, from the two projected in December.

Fed Chairman Jerome Powell is due to announce the second policy decision of the year on Wednesday by the rate-setting Federal Open Market Committee.

The benchmark interest rates is now in a range of 2.25 to 2.5 percent and futures markets see no more rate hikes in 2019.

And investors now put the odds at one in three that the central bank will reverse directions and begin cutting rates in the next 10 months.

· Japan’s exports fell for a third month in February in a sign of growing strain on the trade-reliant economy, suggesting the central bank might be forced to offer more stimulus eventually to temper the effects of slowing external demand and trade frictions.

Slowing global growth, the Sino-U.S. trade war and complications over Britain’s exit from the European Union have already forced many policymakers to shift to an easing stance over recent months.

Japan is in a similar situation to much of the rest of the world, where factories have slammed on the brakes and business confidence has plummeted in the wake of rising global economic uncertainty.

Ministry of Finance data showed on Monday exports fell 1.2 percent year-on-year in February, more than a 0.9 percent decrease expected by economists in a Reuters poll.

It followed a sharp 8.4 percent year-on-year drop in January, marking a third straight month of falls due to drops in shipments of cars, steel and semiconductor production equipment.

· Russian tycoon Oleg Deripaska, a close confidant of Russian President Vladimir Putin, said on Sunday that Moscow and Washington are more interested in “muscle flexing” than improving their relationship.

Asked whether he has hope of thawing tensions between Russia and the West, Deripaska replied: “The way I see it, from the U.S. side, it is impossible.”

· Russian Energy Minister Alexander Novak said on Sunday that Moscow will be fully compliant with OPEC-led supply cuts over the coming weeks.

The Middle East-dominated group, alongside non-OPEC allies such as Russia, agreed to reduce output by 1.2 million barrels per day (b/d) for six months.

OPEC’s share is 800,000 b/d, to be delivered by 11 members — with Iran, Venezuela and Libya exempt from cuts.

· Oil prices were mixed on Monday, weighed by concerns that an economic downturn may dent fuel consumption, but supported by supply cuts led by producer group OPEC and U.S. sanctions against Iran and Venezuela.

Brent crude oil futures were at $67.24 per barrel at 0737 GMT, up 8 cents from their last close, and not far off the $68.14 per barrel 2019-high reached last week.

U.S. West Texas Intermediate (WTI) futures were at $58.43 per barrel, down 9 cents from their last settlement, but also still close to last week’s 2019-high of $58.95.