The dollar’s further weakness on Monday follows its biggest weekly drop since late September following dovish comments by U.S. policymakers last week.
The Federal Reserve’s new-found concerns over the global economy sapped the dollar. Against a basket of its major traded rivals the greenback slipped 0.1 % after falling nearly half a percent last week.
The dollar has been the surprise winner of 2018, having risen nearly 10% from April lows. Such increase is due to a combination of interest rate hikes and strong data. However, the growing view that U.S. economic growth may have reached its peak has begun to fade away such gains.
World shares climbed higher on Monday amid conflicting signals of a potential cease-fire in the China-U.S. trade war. Wall Street had firmed on Friday after U.S. President said that he might not impose more tariffs on Chinese goods.
Forex – Commodities – Dollar’s further weakness boosted by FED
In the currency markets, the pound saw some respite from last week’s Brexit trauma. Euro softened as focus switched back to the U.S.-China trade war.
The British pound turned negative on Monday. The traders pointed to comments from UK Prime Minister that an extension of the Brexit transition period was unlikely.
The pound fell as much as 0.3% to hit a day’s low versus the dollar of $1.2796. The move came after May said she wanted any post-Brexit transition phase to have ended by the 2022 national election.
Against the euro, the sterling also dropped to the day’s low of 89.32 pence.
Sterling suffered its largest one-day drop in two years versus the euro and the dollar last Thursday. Trading on Friday was calmer, but the British currency is highly dependent on Brexit developments.
Despite the dollar’s further weakness, the euro failed to rally significantly above the $1.14 levels. Concerns over negotiations between Brussels and Rome over Italy’s budget plans sapped broader appetite.
In commodities, oil steadied as market prices in expectations of OPEC supply cut to prevent a build-up of unused fuel. It gained in the previous three sessions from the prospect that Saudi Arabia will push OPEC to cut supply towards the year-end.
Brent crude futures were down 6 cents at $66.70 a barrel, while U.S. futures were up 3 cents at $56.49.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.