Shine Bright like a Dollar
The dollar has shined for the most of yesterday’s session as market speculated about coming interest rates hike in the US. Stanley Fischer, vice-chair of the Fed sounded rather hawkish in his last speech. He said the central bank is close to reaching its goals and a rate hike still this year is still being considered.
He expects a rebound of growth in second half of the year once investment expenditures improve and once the negative effect of earlier USD strength dissipates. On the other hand he stressed that a 1,25% decline in labor productivity is a big issue – if this continues it will bring many unwanted consequences to the economy; he was also referring quite negatively to current economic performance. It may indicate that Yellen’s speech in Jackson Hole at the end of this week may open a door for interest rate hike as early as in September.
The US dollar was the strongest currency for the most of yesterday, but lost its shine in past late that afternoon. At the end of the session it gains the most versus the Canadian dollar and Swiss franc. On the other hand it is strongly sold versus British pound.
The oil has retreated from its highest weekly close of the year on Friday with both benchmark loosening more than 3% on daily basis. The sell-off was caused by another rise of drilling rigs in the US and news about an increase of exports from Iraq.
Stocks were sold off Monday, both in Europe and on Wall Street. The scale of the move in the DE30 suggests a large stop order just under previous support may have triggered the rapid decline, and whilst the market recovered the majority of the loss shortly after the price at the time of writing at 10492 still marks a substantial daily decline. Major indices from Wall Street also retreats, but a scale of drop is limited by strong demand zone on S&P 500 below 2180 points.
Looking back the main event last night is a speech from BoJ Governor Kuroda around 05:00 before we have European manufacturing PMIs out Tuesday morning. The French set the ball rolling at 08:00 before the German equivalent half an hour later. The Eurozone wide numbers are released at 09:00. The afternoon session is light in terms of releases with the US flash manufacturing PMI and new homes sales the standouts at 14:45 and 15:00 respectively.
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