Dollar firm after U.S. payrolls do little to change Fed expectations
The U.S. dollar held firm in early Asian trade on Monday after disappointing U.S. jobs growth figures for August did little to change investors' perception that the Federal Reserve is likely to raise interest rates in coming months.
The dollar's index against a basket of six major currencies .DXY =USD managed to stay afloat, quickly bouncing back from one-week low of95.189 touched just after the payroll data.
Draghi Nears His QE3 as ECB Seen Relying on Ever-More Stimulus
With euro-area inflation stuck near zero for almost two years and Brexit now threatening to undercut the region’s recovery, economists see European Central Bank President Mario Draghi as highly likely to lengthen quantitative easing for a second time. That would take the asset-buying program beyond its current end-date of March 2017 and above the target of 1.7 trillion euros ($1.9 trillion).
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More than 80 percent of economists in a Bloomberg survey expect such a decision, with a similar share predicting the ECB will tweak its purchasing rules to avoid running out of securities to buy. Almost half of respondents foresee action on Thursday, when the Governing Council sets policy in Frankfurt, with almost all the rest predicting an announcement at the October or December meetings.
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Inflation in the 19-nation euro area was 0.2 percent in August, unchanged from July, and core inflation weakened. Fresh ECB projections are scheduled to be released on Sept. 8., an event that has often underpinned a decision to change policy.
The more the ECB buys, the greater the risk that a scarcity of assets turns into a shortage. To avoid that, economists see it as almost inevitable that a QE extension would have to be accompanied by a change in the central bank’s self-imposed rules on purchases. That’s a potentially tricky debate in the Governing Council, which set the parameters to avoid concerns over market distortion, monetary financing and risk-sharing.
Japan's Abe tells G20 global economy downside risk increasing
Japanese Prime Minister Shinzo Abe told the G20 summit that the downside risk to the global economic outlook is increasing, a senior Japanese government spokesman said on Monday.
Oil jumps amid talk of producer action to support prices
Crude oil futures rose sharply onMonday amid renewed speculation that major producers includingSaudi Arabia and Russia could cooperate to tackle weak pricesand rein in oversupply.
Brent crude futures for November delivery were up $1.50 perbarrel at $48.33 a barrel at 0812 GMT, after the contract jumpedby almost $2 a barrel earlier in the session.
U.S. crude for October delivery was up $1.20 a barrel at$45.64 a barrel, after hitting a session high of $46.00.
Saudi energy minister Khalid al-Falih will make a"significant announcement" at a news conference at 0930 GMT atthe G20 summit currently being held in Hangzhou in China. This comes after Saudi deputy crown prince told RussianPresident Vladimir Putin on the sidelines of the same summitthat cooperation between the two countries would bring benefitto the global oil market. "Verbal intervention was again needed to trigger a recoverytowards $50," senior ABN Amro economist Hans van Cleef said.
Reference : Reuters, Bloomberg
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