· The U.S. dollar bounced to a two-week top on Monday and S&P futures jumped as traders marked the passage of a Senate tax bill over the weekend, a move that raises the risk of more aggressive rate hikes in the world’s largest economy.
Traders will be focusing their attention on a meeting scheduled for British Prime Minister Theresa May and EU Commission President Jean-Claude Juncker to work on a Brexit deal.
The dollar index .DXY added 0.3 percent against major currencies.
The greenback jumped 0.7 percent JPY= to as far as 112.98 yen, the highest since Nov. 17 on expectations of faster U.S. rate hikes as fiscal policy was set to be eased even while the U.S. economy was running at or near full employment.
“If you do see a U.S. fiscal stimulus in 2018 all its likely to do is accelerate the need for further U.S. policy tightening which indirectly could be negative for emerging markets,” said Chris Weston, Melbourne-based chief market strategist at IG.
“If real yields trend higher and the U.S. dollar rises further that would put emerging markets and Asia on the back burner,” Weston added.
Yields on two-year notes US2YT=RR rose to 1.806 percent, while those on the 10-year bond climbed to 2.4026 percent.
· South Korea and the United States launched their largest-ever joint aerial drills on Monday, officials said, a week after North Korea said it had tested its most advanced missile as part of a weapons programme that has raised global tensions.
The annual U.S.-South Korean drill, called Vigilant Ace, will run until Friday, with six F-22 Raptor stealth fighters to be deployed among the more than 230 aircraft taking part. The exercises have been condemned as a provocation by the isolated North.
· Theresa May hopes to break the Brexit talks deadlock on Monday with a new offer on divorce settlements at a crunch meeting with EU officials, as some of her party members urge her to walk away unless there is progress.
EU officials and diplomats say they are increasingly optimistic a deal can be struck on Monday, while cautioning that things could still go wrong.
· Bank of Japan Governor Haruhiko Kuroda on Monday urged financial institutions to reform their business structures to make effective use of financial technology, which is triggering big changes to global financial markets.
Fintech can contribute to raising growth potential and addressing social challenges not only in emerging but developed nations, Kuroda said in a speech at the Europlace financial forum.
· China’s economic growth target for 2018 will reflect new changes in the economy as the government put more emphasis on higher quality development, the State Council Information Office said on Monday.
The economy grew 6.7 percent last year, a 26-year low, but has expanded 6.9 percent in the first three quarters of 2017.
Still, economists polled by Reuters expect a slowdown next year to 6.4 percent as measures to curb rising housing prices and efforts to deal with debt risks gain more traction.
· Oil fell on Monday after U.S. shale drillers added more rigs last week, but prices still held close to their highest since mid-2015, supported by an extension of output cuts agreed last week by OPEC and other producers.
Drillers in the United States added two oil rigs in the week to Dec. 1, bringing the total count up to 749, highest since September, energy services firm Baker Hughes said in its closely followed report late on Friday.
U.S. West Texas Intermediate was down 46 cents, or 0.8 percent, at $57.90 a barrel at 0431 GMT. Brent futures were down 39 cents, or 0.6 percent, at $63.34 a barrel.
· Tucked in the Senate tax bill's hundreds of pages is a proposal to open up 1.5 million acres of Alaskan wilderness for oil drilling -- and Senator Lisa Murkowski is very happy.
The Arctic National Wildlife Refuge has been closed to oil exploration since 1980 because of concerns about the impact on the region's caribou, polar bears and other fragile ecosystems.
Reference: Reuters, CNBC
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