The dollar is losing ground against all of its major competitors at the beginning of the week. Investors are playing it cautious ahead of this week’s Federal Reserve policy meeting. A very weak performance by the Chinese stock market today also has investors on edge.
The Fed is widely expected to leave interest rates unchanged when its concludes its 2-day meeting on Wednesday. Traders are likely to keep a close eye on the accompanying statement for any hints about the timing of the first rate hike.
The Shanghai Composite Index plunging 345.35 points or 8.5 percent to 3,725.56. The decrease, which marked the biggest percentage drop by the index since February of 2007, reflected concerns about the Chinese economy.
Meanwhile, after reporting a sharp drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Monday showing that orders rebounded strongly in the month of June.
The report said durable goods orders jumped by 3.4 percent in June following a revised 2.1 percent decrease in May. Economists had expected orders to increase by 3.1 percent compared to the 2.2 percent drop that had been reported for the previous month.
The dollar began the week around $1.0980 against the Euro, but has since dropped to nearly a 2-week low, around $1.11.
Germany’s business morale unexpectedly improved in July after concerns due to the uncertainty regarding Greece and its future in euro eased, results of a key survey revealed Monday.
The Ifo Business Climate Index for German trade and industry rose to 108 from June’s revised 107.5, a four month-low. Economists had expected the measure to edge up a point from June’s 107.4 original score.
Germany’s import prices declined at a faster-than-expected pace in June, data from Destatis showed Monday. Import prices slid 1.4 percent year-over-year in June, just above economists’ expectations for a 1.3 percent decrease. In May, prices had fallen 0.8 percent.
There is no need for an interest rate hike soon in the U.K., Bank of England’s Chief Economist Andy Haldane told BBC Newsnight.
Haldane repeated that rates could go up or down in the future and that he thought the current level was appropriate for the near term.
At the July monetary policy meeting, more members moved closer to vote for a rate hike. For those members, Greece was a material factor in holding the rate at 0.50 percent.
Haldane said he saw economic “headwinds” such as demographic change, the overhang of high debt and its aftermath and the rise of short-termism that could mean economic growth in the future is weaker than in the past.
The buck has pulled back from Friday’s week and a half high of $1.5466 against the pound sterling, to around $1.5565 on Monday.
U.K. factory order growth slowed in July to its lowest level in two years, as a strong sterling and weak global conditions weighed on the export outlook, survey data from the Confederation of British Industry showed Monday. The total order book balance dropped to -10 percent in July, which was the lowest since July 2013, when it was -12 percent. Economists had expected a balance figure of -7.
The greenback has dropped to nearly a 2-week low of Y123.175 against the Japanese Yen this afternoon, from a high of Y124.471 last week Tuesday.
Corporate service prices in Japan were up 0.4 percent on year in June, the Bank of Japan said on Monday – shy of estimates for 0.6 percent, which would have been unchanged from the May reading. On a monthly basis, prices were flat after adding 0.1 percent in the previous month.
The material has been provided by InstaForex Company – www.instaforex.com