Dollar Strengthens Before Fischer as Stocks Snap Losing Streak
The dollar strengthened versus most of its peers and U.S. Treasuries retreated as investors assessed the outlook for U.S. interest rates ahead of remarks by Federal Reserve Vice Chairman Stanley Fischer. Global equities rose for the first time in a week.
The Bloomberg Dollar Spot Index climbed to a three-week high as the greenback appreciated for a fifth day versus the yen, the longest winning streak since March. Ten-year U.S. Treasuries retreated, after rallying in the last session for the first time in a week. Benchmark stock gauges in Asia and Europe advanced, while S&P 500 Index futures were little changed after the measure closed within 0.5 percent of a record. Crude hovered above $47 a barrel, while copper held near a two-month low.
Speculation the U.S. will raise interest rates this year surged over the past two weeks, halting a global equities rally and boosting the greenback, as Fed officials including Chair Janet Yellen said the case for a hike is getting stronger. Fischer is due to speak Tuesday in a Bloomberg Television interview, after saying on Friday that a September move is possible. A tightening risks destabilizing financial markets as central banks in Europe and Japan use unprecedented stimulus to support their economies.
The Bloomberg Dollar Spot Index climbed 0.2 percent as of 8:17 a.m. London time, with the U.S. currency strengthening 0.2 percent against the euro and 0.4 percent versus the yen, which was trading at 102.34 per dollar.
The Fed is “likely to tighten in September, at least as long as the jobs number comes in OK,” Michael Pond, head of global inflation market strategy at Barclays Capital Inc. in New York, said on Bloomberg Television. “Hawkish Fed rhetoric has certainly increased recently. It’ll take a decent number, like 200,000, for them to go.”
Japan top government spokesman Suga signals readiness to stem yen gains
Japanese Chief Cabinet Secretary Yoshihide Suga said on Tuesday the government is watching market moves carefully and is ready to respond "appropriately", when asked whether Tokyo could intervene in the currency market to stem excessive yen rises.
Suga, the government's top spokesman, also defended the Bank of Japan's controversial negative interest rate policy, saying that such steps would benefit financial institutions if they help improve the economy.
Shenzhen-Hong Kong Link Expected to Start in November, CSRC Says
The long-awaited link between stock markets in Hong Kong and the mainland city of Shenzhen is expected to start in mid- to late November, according to China’s markets regulator.
The link, the second after Hong Kong-Shanghai, is another step in China’s efforts to open its markets to the global financial community. Barriers to foreigners wanting to trade the $6.4 trillion of mainland equities were one of the reasons that MSCI Inc. decided not to include the shares in its global benchmark indexes in June. Authorities in Beijing have also kept tight control over how much money leaves the country.
Oil futures edged up
Oil futures edged up on Tuesday as the U.S. dollar backed off a two-week high hit the day before, although doubts that crude producers would agree next month to an output freeze continued to drag on prices.
U.S. West Texas Intermediate (WTI) crude CLc1 was up 9 cents at $47.07 a barrel.
Reference: Bloomberg,Reuters
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