· Dollar starts week on back foot ahead of data, earnings
The U.S. dollar edged down in Asian trade on Monday as investors looked to looming economic data from around the world and U.S. corporate earnings to gauge whether the markets’ guarded optimism on the economic outlook is justified.
The greenback had ended its third week of losses on Friday as investors bought into risk-sensitive currencies on bets that the worst of the pandemic’s sweeping impact was over.
The dollar index against a basket of major currencies slipped 0.2% in early Monday trade to 96.452.
U.S. coronavirus cases surged over the weekend, as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state, surpassing a peak hit in New York in April.
“Rising coronavirus cases are not positive but at the moment, markets seem to think that there is still some distance to a situation where an overflow of the medical system will force them to put restrictions on the economy,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Hopes for development of drugs and vaccines for the disease are also supporting risk sentiment as do economic indicators that have so far shown a recovery from lockdowns.
U.S. consumer inflation figures for June are due on Tuesday while retail sales, a key gauge of consumption, are released on Thursday.
The U.S. corporate earning season will start this week, providing another window to assess the scale of the damage as well as the recovery, from the pandemic.
The euro rose 0.25% to $1.1329, maintaining its slow uptrend since late last month.
Looming large for the common currency was a planned EU summit on July 17-18, where leaders need to bridge gaps on long-term budget and economic stimulus plans.
European Council President Charles Michel proposed a smaller joint EU budget for 2021-27 than previously envisaged to placate thrifty countries in the north.
The British pound also gained 0.3% to $1.2656, edging near its three-week high of $1.2668 touched last week.
The dollar also lost small ground against the safe-haven yen, to 106.83 yen, staying near two-week lows of 106.635 set on Friday.
Investors also looked to China, where economic recovery is gaining momentum as the outbreak has largely been contained.
China will release its June trade data on Tuesday and a batch of other data, including second quarter GDP, on Thursday.
The Chinese yuan gained 0.15% to 6.9987 per dollar in early trade.
· China's export slump to ease in June as economies reopen, imports fall less: Reuters poll
The slump in China’s exports likely eased in June as some countries reopened their economies, while imports contracted less sharply on higher crude oil and commodities purchases, a Reuters poll showed on Monday.
June exports from the world’s second-largest economy are expected to have contracted 1.5% from a year earlier, according to a median estimate from the survey of 32 economists, easing from a decline of 3.3% in May.
Imports likely fell 10.0% on year, the poll showed, compared with a steep drop of 16.7% the previous month, due to higher purchases of crude oil and orders for infrastructure materials.
· Oil slips as traders expect OPEC+ to ease supply cuts
Oil slipped nearly 1% on Monday as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices.
Brent crude LCOc1 fell 29 cents, or 0.7%, to $42.95 a barrel by 0510 GMT while U.S. West Texas Intermediate crude CLc1 was at $40.25 a barrel, down 30 cents, or 0.7%.
Oil was little changed last week as a resurgence of coronavirus cases prompted several U.S. states to impose tighter travel restrictions that could dampen oil demand recovery at the world’s largest consumer. [nL2N2EJ04T]
However, prices climbed more than 2% on Friday after the International Energy Agency raised its 2020 oil demand forecast by 400,000 barrels per day.
Reference: CNBC, Reuters
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