Dollar ends flat in lackluster trading on Monday

Market Review - 15/07/2019  23:58GMT  

Dollar ends flat in lackluster trading on Monday

The greenback ended little changed on Monday against its peers as investors remained cautious ahead of the Federal Reserve's policy meeting later in July amidst speculation that the central bank would cut its key rates. Despite intra-day weakness in Asia and European morning, dollar staged a rebound vs its G4 counterparts in New York session as release of upbeat U.S. data triggered short covering in usd following last week's decline.  
  
Reuters reported the New York Federal Reserve said on Monday its gauge of business growth in New York state recorded its biggest increase in more than two years in July, returning to positive territory to suggest regional activity was expanding again.  The index's increase reversed the prior month's record 26 point drop that had stoked concerns about a sudden contraction in business activity across New York state.  
  
U.S. business sentiment has been bogged down by trade tensions between the United States and its major trading partners. Some of those concerns have been offset by hopes the Federal Reserve would lower short-term interest costs to boost borrowing and demand.  The regional Fed's "Empire State" index on current business conditions jumped to 4.3 points this month from -8.6 in June, which had been the first negative reading since October 2016.  For July, analysts polled by Reuters had forecast a reading of 2.0.  
  
Versus the Japanese yen, although price rose to session highs at 108.11 in Asian morning on the back of upbeat Chinese data, price pared its gains and retreated to 107.83 in European morning on cross-buying in jpy before moving narrowly but with a soft undertone in New York due to continued cross-buying in the yen.  
  
Reuters reported China's industrial output grew 6.3% in June from a year earlier, official data showed on Monday, picking up from May's 17-year low and handily beating market expectations.  Analysts polled by Reuters had tipped a 5.2% rise, compared with 5.0% growth seen in May.  Fixed-asset investments for the first half of the year rose 5.8% from a year earlier, according to data published by the National Bureau of Statistics, compared with a 5.5% rise forecast by analysts.  
  
The single currency traded with a firm bias in Asia and gained to an intra-day high at 1.1284 in European morning on cross-buying in euro especially vs sterling. However, failure to penetrate last Friday's 1.1285 prompted long liquidation, price erased its gains and later dropped to session lows at 1.1254 in New York morning, euro last traded at 1.1257 near the close.  
  
The British pound gained to 1.2579 in New Zealand before retreating to 1.2560 in Asian morning. Intra-day decline accelerated in Europe on cross-selling in sterling and tumbled to session lows at 1.2510 in New York morning before moving narrowly in subdued New York afternoon.  
  
In other news, Reuters reported, Germany's Ursula von der Leyen said on Monday she would support giving Britain more time to negotiate its exit from the European Union as part of a series of promises to persuade EU lawmakers to back her as European Commission president.  "If elected, I am ready to pave the way to the ambitious and strategic partnership we want to build with the United Kingdom. Should more time be required and should there be good reasons provided, I will support a further extension if good reasons are provided," von der Leyen said in letters to the socialists and liberals in the European Parliament seen by Reuters.    
EU lawmakers will cast their vote in a secret ballot on Tuesday amid worries that von der Leyen will fail to garner the absolute majority required. The greens have already said they will oppose her nomination.   
  
Data to be released on Tuesday:  
  
New Zealand CPI, Italy trade balance, CPI, UK claimant count, ILO unemployment rate, average earnings, EU trade balance, ZEW economic sentiment, Germany ZEW economic sentiment, current situation, U.S. retail sales, export price, import price, redbook retail sales, industrial production, capacity utilisation, business inventories and NAHB housing index.