· The U.S. dollar was little changed against a basket of currencies on Monday, sticking close to a two-week low, as caution about the American economy and expectations for an accommodative Federal Reserve kept the greenback subdued.
The dollar index, which tracks the greenback versus the euro, yen, British pound and three other currencies, was about flat on the day at 96.50. The index hit a two-week low of 96.376 earlier in the session.
The dollar has weakened in recent sessions as investors expect the Fed to strike a dovish tone when it meets this week.
· "The Fed will be the big news this week, and the market is looking for them to reinforce the dovish line and continue to hammer the point that they are here to support markets," Brad Bechtel, global head of FX at Jefferies, said in a note.
· Traders will focus on whether policymakers will have sufficiently lowered their interest rate forecasts to more closely align their individual rate views for the next three years with the pledge of patience, analysts say.
· Investors will also be watching for details on any plans by the Fed to stop culling its holdings of nearly $3.8 trillion in bonds.
· Russia's ruble hit a seven-month high, supported by stronger oil prices and interest in the country's sovereign bonds.
· Sterling dropped below $1.32 after the speaker of Britain's parliament said Prime Minister Theresa May's Brexit deal could not be voted on again unless a different proposal was submitted.
· U.S. government debt yields rose slightly on Monday as investors awaited a Federal Reserve meeting later in the week.
At around 3:05 p.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.603 percent, while the yield on the 30-year Treasury bond was little changed at 3.014 percent.
On Friday, the yield on the benchmark 10-year Treasury note hit its lowest level since early January.
· The Federal Reserve will bring the current cycle of interest-rate increases to an end after one more hike later this year, according to a new Bloomberg survey of economists.
The median of responses in the March 13-15 poll predicted one hike in September, compared with two 2019 increases forecast in the December survey. They also said that would likely mark the peak of this hiking cycle, with the upper end of the target range for the benchmark rate touching 2.75 percent. Just three months ago they saw that peak at 3.25 percent.
None of the 32 respondents anticipated a rate move when the Federal Open Market Committee gathers in Washington March 19-20. Fed officials have repeatedly signaled they are content to leave rates unchanged this month and perhaps well into 2019.
Looking forward, respondents continued to see downside risks to growth and inflation as far outweighing upside risks. They also identified slowing global growth as the biggest threat to the U.S. economy in 2019, followed by international trade disputes and Fed tightening.
· Britain on Monday reached an a deal with Iceland and Norway to allow trade to continue unchanged if it leaves the European Union without a deal, trade minister Liam Fox said.
Britain is seeking to replicate around 40 EU bilateral trade deals ahead of its exit from the bloc.
If Britain leaves without a deal, existing bilateral trade agreements will cease to apply.
· European Union leaders could hold off making any final decision on any Brexit delay when they meet in Brussels later this week, senior diplomats in the bloc said, depending on what exactly British Prime Minister Theresa May asks them for.
The senior national diplomats in Brussels spoke on Monday afternoon after the UK’s speaker of parliament seemed to have dashed May’s hopes for a third House of Commons vote - which had initially been expected as soon as this week - to approve her stalled divorce deal with the bloc.
The speaker, John Bercow, said the deal would need to be fundamentally different to qualify for another vote, after parliament rejected the agreement in January and again last week.
· The German government’s budget plan for 2020 calls for a 1.7 percent hike in spending to 362.6 billion euros and relies on ministries cutting costs to avoid incurring new debt given forecasts for slower economic growth, Finance Ministry sources said on Monday.
The plan assumes that Europe’s largest economy will grow by 1.0 percent in 2019, down from an initially projected 1.8 percent, the sources said.
The Economy Ministry last week said the economy had a subdued start to 2019 and probably grew moderately in the first quarter, its outlook dampened by trade conflicts and sluggish demand for industrial products among other factors.
· German Chancellor Angela Merkel said on Monday she hoped inflation in the euro zone would soon reach the target set by the European Central Bank so the central bank can start raising interest rates.
“I believe or I hope - we have almost reached the 2 percent inflation rate - that the ECB can change its policy,” Merkel said during a town hall meeting in the northern city of Bremen.
· Oil prices rose on Monday, supported by the prospect of prolonged OPEC-led oil supply curbs and signs of inventory declines at the delivery point for U.S. crude futures.
OPEC and its allies met in Azerbaijan to monitor their crude supply reduction pact, where they said they would exceed commitments in the coming months.
The group agreed to cancel their April meeting, meaning the next meeting of the producer group known as OPEC+ will not be until June.
On Sunday, Saudi Arabia signaled the producers may need to extend the 1.2 million barrels per day of supply curbs past June into the second half of 2019.
U.S. West Texas Intermediate crude settled Monday's session 57 cents higher at $59.09, rising 1 percent to the best closing price since Nov. 12. WTI hit a four-month intraday high at $59.23 earlier in the session.
Brent crude, the global benchmark, rose 38 cents, or about half a percent, to $67.54 on Monday. It reached a 2019 intraday high of $68.14 last week.
Reference: CNBC, Reuters, Bloomberg
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