The dollar climbed on Monday against a basket of major traded currencies as global growth worries weighed. Investors hunted the liquid and high-yielding asset against rising political risk in Italy and Britain too.
Sterling lost more than 1% at one point, holding near a 10-day low hit earlier. The British currency had hit a session low of $1.2827 in the early London session. However, the pound bounced after the FT reported that the main elements of a Brexit treaty text are ready.
British Prime Minister Theresa May’s Brexit strategy came under attack from all sides. Therefore, the risk that her plan for leaving the European Union will be voted down by parliament increased.
Against the euro, sterling turned positive on the day to trade up 0.1% at 87.27 pence.
The single currency comprising more than 50% of the dollar index, fell 0.7% to its lowest since July 2017. In the euro zone, Italy faces a Tuesday deadline to submit a revised budget to the EU. However, its refusal so far to cut the draft deficit sets the stage for a collision with Brussels.
All of this has been good news for dollar bulls, who have benefited from safe-haven flows.
Forex – Commodities – Global growth worries – Dollar to a 17-month peak
The other big move was in commodities. Oil prices rose on Monday.
Saudi Arabia’s energy minister jolted Brent crude futures around 2% higher with his comments. He stated that Riyadh could reduce supply to world markets by 500,000 barrels per day in December. That means a global reduction of about 0.5%.
Brent is trading off seven-month lows touched last week. Brent crude futures LCOc1 were up 52 cents at $70.70 a barrel, while U.S. crude futures rose 36 cents to $60.55.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.