- The U.S. dollar declined against other major currencies on Monday amid soft manufacturing data from the country and dovish remarks from the Federal Reserve Vice Chairman Stanley Fischer about the U.S. economy.
In late New York trading, the euro climbed to 1.0901 dollars from 1.0829 dollars in the previous session, while the dollar bought 121.09 Japanese yen, lower than 121.17 yen of the previous session.
The U.S. Dollar Index, a gauge of the greenback against a basket of major currencies, fell by 0.52 to 99.13 as of 1745 GMT.
- It isn't clear how the recent global market volatility and uncertain economic outlook affect the U.S. economy, Stanley Fischer, vice chairman of the Federal Reserve, said on Monday.
- "At this point, it is difficult to judge the likely implications of this volatility," Fischer said at an event held by the Council on Foreign Relations, referring to the recent global market volatility.
"In the longer term, we still expect the dollar will go higher ... and we still have three (US interest rate) hikes in our scenario, but there is uncertainty around that ... and gold has benefited," ABN Amro analyst Georgette Boele said.
- Weaker fourth-quarter US economic growth underpinned hopes that the Federal Reserve would slow the pace of future US rate increases, aiding gold by cutting the opportunity cost of holding it and keeping a lid on the dollar.
- There was more downbeat economic data coming out of China Monday. The January official China manufacturing purchasing managers index (PMI) was reported at 49.4 versus 49.7 in December, for the sixth month in a row of a lower reading than the previous month. A number of 49.6 was expected for the January report. A reading below 50.0 suggests contraction in the sector. The services sector, or non-manufacturing, PMI for China came in at 53.5 in January versus 54.4 in December. Chinese stock indexes fell on the PMI reports.
- Meantime, the U.S. manufacturing PMI for January came at 48.2 versus 48.0 in December. A reading of 48.0 was expected. The January number marked the fourth month in a row of contraction (below 50.0).
The Euro zone manufacturing PMI came in at 52.3 versus 53.2 in December. The January number was right in line with forecasts. European stocks were weaker Monday.
- European Central Bank President Mario Draghi defended the ECB's monetary policy decisions in a debate with MEPs on Monday evening, saying that the Bank will revise its monetary stance in March and acknowledging that the December 2015 inflation outlook was too rosy.
- Oil futures fell 6% on Monday as downbeat economic data from China and growing doubts over a coordinated oil-producer output cut helped prices settle lower for the first time in five sessions. March West Texas Intermediate crude CLH6, -1.01% finished at $31.62 a barrel on the New York Mercantile Exchange, down $2. Prices had gained roughly 10.8% over the past four consecutive sessions.
- U.S. crude fell for a second session in early Asian trade on Tuesday as worries about the economic health of top energy consumer China and rising oil supply weighed on markets.
The front month contract for West Texas Intermediate (WTI) CLc1 was down 28 cents at $31.34 as 0010 GMT after falling $2, or 5.9 percent, in the previous session.
The benchmark at one point posted its biggest daily loss in five months on Monday, dropping 6.9 percent to an intraday low of $31.29 although that was still nearly 20 percent above the more than 12-year low of $26.19 hit in mid-January.
Cr. Xinhuanet, Reuters, Kitco, Market Watch
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