A popular gauge for the U.S. dollar slipped into negative territory in Monday trading, following an eventful weekend that included a contentious conclusion to a meeting of Group of Seven leaders that left U.S. President Donald Trump isolated on trade policy with his closest allies and deepened a rift with Canada.
The Canadian dollar bore the brunt of the fallout from the meeting, putting in the worst performance among major currencies.
What are currencies doing?
The ICE U.S. Dollar Index
which measures the buck against six rivals, was down 0.1% at 93.494, after recording a 0.4% drop last week. The broader WSJ Dollar Index
a broader gauge of the greenback, rose 0.1% to 86.92.
The greenback advanced against Canada’s currency
rising to C$1.3013 from C$1.2927 Friday.
climbed to $1.1799 from $1.1771 late Friday in New York, after Italy’s Economy Minister Giovanni Tria said the country’s new coalition government is committed to the euro. The remarks came in an interview with Italian newspaper Corriere Della Serra published Sunday.
The British pound
fell to $1.3382 from $1.3411 Friday, after economic data showed a sharp 1.1% decline in U.K. factory output in April. This could add to doubts about future interest rate increases from the Bank of England.
fell against the dollar, with the buck buying ¥109.87 compared with ¥109.54 late Friday in New York.
Ahead of the Singapore summit between Trump and North Korea leader Kim Jong Un, South Korea’s won
was in focus. The dollar last bought 1,075.21 won, little changed from Friday.
What’s driving the market?
The loonie, as Canada’s currency is also known, was under pressure after Trump and Canadian Prime Minister Justin Trudeau verbally crossed swords after the G-7 summit concluded on Saturday in Charlevoix, Quebec. Trump withdrew his support for the group’s communiqué after Trudeau criticized U.S. tariffs on Canadian metals.
Fair Trade is now to be called Fool Trade if it is not Reciprocal. According to a Canada release, they make almost 100 Billion Dollars in Trade with U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out!
— Donald J. Trump (@realDonaldTrump) June 11, 2018
Trump left the G-7 meeting early to travel to Singapore, where he’s now preparing for Tuesday’s much-anticipated meeting with Kim. The first meeting between a sitting U.S. president and a North Korean leader is scheduled for Tuesday at 9 a.m. Singapore time, or 9 p.m. on Monday Eastern Time.
And check out: Trump rips Canada, NATO in Singapore tweetstorm
This week, there will be plenty of action from the monetary policy front. The U.S. Federal Reserve is widely expected to increase interest rates on Wednesday, and the European Central Bank expected to discuss when it will begin to end its bond-buying program at its meeting Thursday in Riga, Latvia.
What are strategists saying?
“The Canadian dollar is a notable loser following the new low in U. S.—Canadian trading relations. The U.S.-Canadian dollar gapped higher on the open on Sunday…as investors acknowledge that Nafta negotiations will almost certainly have a much harder edge to them following Trump’s early departure from the G-7 Summit and castigating tweets aimed at Canadian Prime Minister Trudeau,” wrote Jasper Lawler, head of research at London Capital Group.
“With no high impacting Canadian data due until Thursday, we expect the pair to remain vulnerable to further trade headlines and the dollar to be in the driving seat,” said Lawler.
“The Korean won has been lively in the days before the summit,” said Jameel Ahmad, global head of currency strategy at FXTM, in a note discussing potential winners and losers coming out the summit. “This is potentially as significant for South Korea as it is for North Korea. It is expected that the Korean won would rally as a result of a positive meeting…mainly because it increases the likelihood of further improved relations between North and South Korea,” he said.
“If the summit takes a negative turn, it can’t be ruled out that the Korean won would sell off on market uncertainty that North Korea could return to testing nuclear capabilities,” Ahmad added.
What’s on the economic calendar?
Monday’s only data is a survey of consumer expectations, due at 11 a.m. Eastern Time.
Source : MTV