• The dollar regained some footing on Monday after slipping earlier on a U.S. government shutdown, supported by higher Treasury yields, while investors took a relatively calm view of the Washington wrangling.
The dollar’s index against a basket of six other major currencies initially dipped to hit 90.155 but was last up 0.07 percent at 90.634, managing to hold above the three-year trough of 90.113 set on Thursday.
The euro was mostly flat at $1.2227 after dipping to$1.2275, and failing to regain a three-year peak of $1.2323 that it scaled on Wednesday.
“The dollar’s losses have been limited as negotiations going into Friday were proving difficult and the market had time to price in a U.S. government shutdown,” said Shin Kadota, senior strategist at Barclays in Tokyo.
“The shutdown is also not expected to last a very long time. That said, if the shut down stretches out to several weeks, then we would have to start worrying about the negative impact on the U.S. economy.”
• The Federal Reserve should continue to raise rates at a gradual pace during 2018, San Francisco Federal Reserve Bank President John Williams said on Friday, saying he expects the recent tax cuts and other tailwinds to boost economic growth this year.
“Right now my base case is that three rate increases for 2018 seems like a good starting point.” Williams told reporters after a talk at the Bay Area Council Economic Institute, adding, “That’s not something that’s locked in.”
While there are no signs in the wage or price data of an incipient surge in inflation, he said, “there are clearly signs… the economy does better than I expect,” but any increase in the rate-hike pace in response would be slight.
Williams forecast the U.S. economy to grow at about 2.25 percent to 2.5 percent, fast enough to push the U.S. unemployment rate, now at 4.1percent, to about 3.7 percent by the end of the year. He also said he expects inflation to rise to the Fed’s 2-percent goal over the next two years.
• U.S. lawmakers struggled on Sunday to reach a breakthrough during the second day of a government shutdown.
If Republicans and Democrats are unable to resolve their differences, federal agencies could remain partially closed when the work week begins on Monday.
During shutdowns, non-essential government employees are furloughed, or placed on temporary unpaid leave. Workers deemed essential, including those dealing with public safety and national security, keep working.
• A U.S. government shutdown will enter its third day on Monday as Senate negotiators failed to reach a deal late on Sunday on Democrats’ demand for legislation protecting “Dreamers,” young people brought to the country illegally as children.
The Senate set a vote for 12 p.m. (1700 GMT) on Monday on advancing a measure that would provide temporary government funding through Feb. 8 and allow thousands of federal employees to return to work.
• South Korean President Moon Jae-in said on Monday more efforts should be made to ensure that inter-Korean discussions for next month’s Winter Olympics lead to talks between North Korea and the United States over the North’s weapons programmes.
• Germany’s Social Democrats (SPD) on Monday demanded concessions on immigration and healthcare from Chancellor Angela Merkel’s conservatives in looming coalition talks that the center-left party voted for at the weekend
• Oil prices climbed on Monday, pushed higher by comments from Saudi Arabia that cooperation between oil producers who are withholding supplies would continue beyond 2018.
Brent crude futures LCOc1 were at $68.84 a barrel at 0756 GMT, up 23 cents, or 0.34 percent, from their last close. Brent on Jan. 15 rose to$70.37, its highest since December 2014.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.53 a barrel, up 16 cents, or 0.25 percent, from their last settlement. WTI climbed to $64.89 on Jan. 16, also its highest since December 2014.
Reference: Reuters, CNBC
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