Dollar starts the week with Fed-inspired gains
The dollar stood tall in Asian trading on Monday, after Federal Reserve Chair Janet Yellen's upbeat comments on the U.S. economy prompted traders to raise their expectations of an interest rate increase.
The dollar added 0.4 percent to 102.24 yen JPY= after earlier rising as high as 102.28, its strongest since Aug. 12.
The euro was flat at $1.1202 EUR=, while the dollar index, which tracks the greenback against a basket of six rivals, was down slightly on the day at 95.519 .DXY. But earlier in the session, it rose to 95.608, its highest since Aug. 16.
Emerging Markets Fall as Divergent Fed Boosts Dollar
Emerging-market assets declined and the dollar strengthened versus most peers after comments from central bankers highlighted the divergence between monetary policy in the U.S. and other parts of the world. European shares were little changed.
MSCI gauges of emerging-market stocks and currencies sank to their lowest levels in at least three weeks after Federal Reserve leaders spurred bets a U.S. interest-rate increase is coming in September. The Bloomberg Dollar Spot Index built on its biggest jump since June, while commodities including crude oil and gold fell. Japan’s Topix index of shares jumped after central bank chief Haruhiko Kuroda reiterated a pledge to boost monetary stimulus if needed. Sovereign bonds fell across most of Europe.
Almost unthinkable two months ago, the prospect of a September rate hike in the U.S. is now firmly on the table with the probability of such a move having jumped to 42 percent from 22 percent in the space of a week.
The MSCI Emerging Markets Currency Index fell 0.7 percent, led by a 1 percent slide in South Korea’s won. Most of the central banks that are tracked by Bloomberg in both Asia and Europe have cut interest rates this year.
BOJ won’t hesitate to take action to meet inflation goals, Kuroda says
Bank of Japan Gov. Haruhiko Kuroda said Saturday that the central bank will take additional monetary easing measures “without hesitation” to achieve its inflation target.
“Ample space for additional easing is available,” Kuroda said here at the Federal Reserve Bank of Kansas City’s annual economic symposium.
The Bank of Japan is expected to take action at the central bank’s next policy meeting in September.
Kuroda also addressed inflation targeting, a topic under discussion among global central bankers at the Jackson Hole gathering after San Francisco Fed President John Williams made the case for considering a higher inflation target as a way to adapt to the new world of lower interest rates.
Kuroda said the Bank of Japan doesn’t intend to shift its 2% inflation target, either lower or higher. His words echo Federal Reserve Chairwoman Janet Yellen, who also said at Jackson Hole that the Fed isn’t considering changing its 2% inflation objective.
Germany's economy minister: U.S.-EU free trade talks have failed
Germany's Economy Minister Sigmar Gabriel said on Sunday that talks on the Transatlantic Trade and Investment Partnership (TTIP), a free trade deal being negotiated by the United States and the European Union, had essentially failed.
"The negotiations with the USA have de facto failed because we Europeans did not want to subject ourselves to American demands," he said, according to a written transcript from German broadcaster ZDF of an interview due to be broadcast on Sunday.
"Things are not moving on that front," said Gabriel, who is also Germany's vice chancellor.
The U.S. and the EU have been negotiating the TTIP for three years and both sides had sought to conclude talks in 2016 but they have differences over various issues, including agriculture.
US non-farm payrolls, China manufacturing PMIs to drive sentiment this week
The all-important U.S. non-farm payrolls report and manufacturing surveys from China are expected to drive investor sentiment this week, while data out of Japan and India will also jockey for trader interest.
Last Friday, U.S. Federal Reserve Chair Janet Yellen upped the chances for a September rate hike and struck a more optimistic note on the economy at a much-anticipated speech at an economic symposium at Jackson Hole, Wyoming.
Following her remarks, Fed vice chair Stanley Fischer told CNBC the August jobs report, due to be released on Friday, would likely weigh on the Fed's decision, along with other data that may come in before the Federal Open Market Committee's two-day meeting beginning September 20.
The U.S. likely added 180,000 jobs in August, according to the median forecast in a Thomson Reuters poll.
Oil Resumes Drop Near $47 Amid Market Stabilization Deal Doubts
Oil declined amid doubts producers will agree on a deal to stabilize the market when suppliers meet next month for informal talks.
Futures decreased as much as 1.8 percent in New York after rising the previous two sessions. The oil market should achieve stability soon, United Arab Emirates Oil Minister Suhail Al Mazrouei said in a Twitter post. Iran’s plan to continue boosting crude output until it regains its pre-sanctions OPEC market share is dimming prospects of collective action, according to Patrick Allman-Ward, chief executive officer of Dana Gas PJSC.
West Texas Intermediate for October delivery dropped as much as 86 cents to $46.78 a barrel on the New York Mercantile Exchange and was at $46.94 at 11:29 a.m. in Dubai. The contract gained 31 cents to $47.64 on Friday, trimming a weekly decline. Total volume traded was about 37 percent below the 100-day average. Prices slid 1.8 percent last week.
Reference: Reuters,Bloomberg,MarketWatch,
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