Dollar edges up on Fed Dudley's comments, yen slips

Marco Green
June 20, 2017

Stocks on Wall Street broke new records, U.S. government bond yields rose, and the United States dollar index, a measure of the greenback against a basket of currencies, gained 0.4 per cent after Dudley said he expects inflation to get back to 2 per cent as the USA labour market tightens and drives up wages.

An index, which gauges the dollar against six other currencies, was up 0.15 percent at 97.310. The euro was up 0.1 percent against the yen, at 124.25 yen.

He said he did not read the market move as a negative signal for the US economy, but rather one that reflects low overseas inflation and borrowing costs.

Brexit Secretary David Davis starts negotiations in Brussels on Monday, which will be followed by a Brussels summit on Thursday and Friday where British Prime Minister Theresa May will encounter - but not negotiate with - fellow European Union leaders.

Retailers in Europe, up 0.8 percent, and the USA, up 0.7 percent, recouped some losses suffered in the wake of news on Friday of Amazon's $13.7 billion deal to buy upscale grocer Whole Foods Market (NasdaqGS: WFM - news). There was no discernible boost for the single currency from the landslide victory of French President Emmanuel Macron's government in parliamentary elections on Sunday.

Spot gold was down 0.1 per cent at $1,252.21 per ounce, as of 0127 GMT.

The dollar was subdued after USA homebuilding fell for a third month in May to the lowest in eight months and a barometer of US consumer sentiment unexpectedly fell in early June, prompting concerns about the Federal Reserve's plans to stick with its monetary policy tightening.

On Monday, New York Fed President William Dudley's comments came with doubts whether stubbornly low inflation, which has been stuck below the central bank's 2-percent goal, would allow policy-makers to raise rates further the rest of the year.

Gold slipped on Monday on a firm dollar as markets awaited comments by a top Federal Reserve official for clues on whether recent strength can be sustained, after last week's soft economic data.

The dollar added 0.1 percent to 111.01 yen, after touching a two-week high on Friday.

USA crude slipped 0.45 percent to $44.55 a barrel, while global benchmark Brent dropped 0.4 percent to $47.17. It hit a fresh low of $1,250.80 during the session, its lowest since May 24.

Other reports by Click Lancashire

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