The dollar rose in early trading on Monday, adding to a third week of gains as hawkish comments by Federal Reserve officials and geopolitical tensions bolstered the appeal of the greenback.
(Bloomberg) — The dollar rose in early trading on Monday, adding to a third week of gains as hawkish comments by Federal Reserve officials and geopolitical tensions bolstered the appeal of the greenback.
Shares fell in Japan and Australia, along with US equity futures. The S&P 500 Index declined Friday and slid for a second week.
Futures contracts for Hong Kong slid earlier. A report from Goldman Sachs Group Inc. tipping a rebound in Chinese stocks added a counterweight to the flow of news damping appetite for equities. Investors in China will also be on the lookout for any potential cut to the nation’s prime loan rates Monday.
The dollar’s advance versus most of its Group-of-10 peers followed a weekend that saw no cooling of US-China tensions. Beijing’s top diplomat labeled the American response to the balloon it shot down “hysterical” while his counterpart Antony Blinken said its entry into his nation’s airspace was “irresponsible.” Meanwhile, North Korea test-fired an intercontinental ballistic missile.
Above and beyond this, investors are focused on the shifting outlook for interest rates, with traders fully pricing in quarter-point interest rate increases at the Fed’s next two meetings after policymakers said Thursday that bigger hikes were not out of the question.
Federal Reserve Bank of Richmond President Thomas Barkin said Friday that he favored a quarter-point interest rate hike in February to give the central bank “flexibility” in its quest to tamp down inflation. Fed Governor Michelle Bowman said rates need to keep going higher since inflation remains “much too high.”
Futures for US Treasury were little changed in early Asia trading Monday. Cash Treasuries were closed for the President’s Day holiday.
Looking further ahead this week, investors will also be watching for more commentary on the American consumers as Walmart Inc. and Home Depot Inc. kick off a slew of retail earnings reports. Further signs of resilient economy could provide more reasons for the Fed to hold rates higher for longer.
In commodities, oil rose fractionally after capping its longest string of daily losses on the year last week. Rising US oil inventories and the prospect of further tightening by the Fed last week eclipsed the lift from signs that Chinese energy demand is improving. Gold slid.
Key events this week:
- Earnings for the week are scheduled to include: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, BHP, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, HSBC, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery
- China loan prime rates, Monday
- US financial markets closed for Presidents’ Day holiday, Monday
- PMIs for Japan, Eurozone, UK, US, Tuesday
- US existing home sales, Tuesday
- US MBA mortgage applications, Wednesday
- The Federal Reserve minutes from Jan. 31-Feb. 1 policy meeting, Wednesday
- Eurozone CPI, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Raphael Bostic speaks, Thursday
- G-20 finance ministers and central bank governors meet in India, Thursday-Friday
- Japan CPI, Friday
- BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 9:20 a.m. Tokyo time. The S&P 500 closed 0.3% lower on Friday
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 closed 0.7% lower on Friday
- Japan’s Topix index fell 0.1%
- South Korea’s Kospi index fell 0.8%
- Australia’s S&P/ASX 200 Index fell 0.2%
- Hong Kong’s Hang Seng futures fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.0678
- The Japanese yen fell 0.1% to 134.35 per dollar
- The offshore yuan was little changed at 6.8787 per dollar
- The Australian dollar fell 0.2% to $0.6865
Cryptocurrencies
- Bitcoin fell 0.6% to $24,397.78
- Ether fell 0.2% to $1,683.78
Bonds
- The yield on 10-year Treasuries was little changed at 3.81%
- Australia’s 10-year yield declined two basis points to 3.80%
Commodities
- West Texas Intermediate crude rose 0.2% to $76.49 a barrel
- Spot gold fell 0.2% to $1,837.91 an ounce
This story was produced with the assistance of Bloomberg Automation.
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