· The dollar edged up on Monday, hovering at a three-week high, as it held on to gains after news of a stronger-than-expected increase in U.S. jobs in June scaled back traders’ expectations of a sharp Federal Reserve rate cut at the end of July.
The dollar index was up 0.08% at 97.359, which was close to a 3-week high of 97.443 hit on Friday. The greenback’s rebound follows a period of weakness as mounting expectations for Fed rate cuts weighed.
The dollar strengthened 0.18% to 108.67 yen after hitting 108.73, which was the highest since June 11.
· The euro was marginally lower at $1.1214 after hitting $1.1208 on Friday. The common currency has been under pressure from dollar strength and weakness in the German industrial sector.
· The British pound, which hit a six-month low below $1.25 on Friday after poor economic data and on heightened expectations that the Bank of England will cut interest rates in 2020, fell 0.22% to $1.2508.
· Turkey’s lira at one point slid to a two-week low of 5.8245 to the dollar and was last down 1.59% at 5.724.
· “Some naive market participants might still hope that the new central bank governor will come across as being independent in a statement announced for this week and at least does not cut interest rates right away,” Commerzbank analysts said.
“That may be the case but does not change the fact that medium term sensible Turkish monetary policy will not be possible.”
· Traders await Fed Chairman Jerome Powell’s two-day testimony before Congress, which starts on Tuesday for clues about a rate decrease.
The leader of the U.S. central bank is scheduled to speak before the House Financial Services Committee Wednesday and the Senate Banking Committee on Thursday.
· The latest escalation seems in part to have been caused by Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in failing to make progress on outstanding disagreements at last month’s G-20 summit.
According to Seaman, Abe “appears to have been particularly irked” by the failure to resolve “differences over the handling of recent South Korean court rulings awarding damages to Koreans claiming to have been forced to work for Japanese firms during World War II.”
The recent tensions between the two countries stem from more than six decades of resentment from South Korea toward Japan. During the Japanese occupation of the Korean Peninsula from 1910 to 1945, many Korean woman were forced into sex work in military brothels. The term “comfort women” has often been used by Japan as a euphemism for all the women forced into sex work in the region during WWII.
Japan apologized to the women as part of a 2015 deal and provided a 1 billion yen, approximately $9.4 million, fund to help them.
But advocacy groups for “comfort women” in Korea have criticized the fund, and the South Korean government on Friday dissolved the fund despite Japan’s warnings that such action could damage bilateral ties.
· Inflation-adjusted real wages in Japan fell in May from a year earlier, a fifth straight month of decline that raises worries about the strength of consumer spending.
Real wages fell 1.0% in May, labor ministry data showed on Tuesday, after a downwardly revised 1.4% annual decline in April.
· Japan’s core machinery orders fell for the first time in four months in May, the biggest monthly drop in eight months in a worrying sign that global trade tensions are taking a toll on corporate investment.
· Oil prices firmed on Monday on tensions over Iran’s nuclear program but gains were capped by concerns about global economic growth and consequently oil demand.
U.S. West Texas Intermediate (WTI) crude futures rose 15 cents, or 0.3%, to settle at $57.66 a barrel.
Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year.
Oil prices remain under pressure from lingering worries about demand as the U.S.-China trade war has dampened prospects for global economic growth.
· Goldman Sachs said growth in U.S. shale production is likely to outpace that of global demand at least through 2020 and limit gains in oil prices despite output curbs led by the Organization of the Petroleum Exporting Countries
Reference: CNBC
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