Dollar Starts Week on the Defense
The dollar started the last week of June slightly on the defensive as a U.S. bond yields were limited by an adjusted inflation outlook and questions began circulating, once again, about the Federal Reserve’s plans to tighten economic policy. The dollar was trading at 111.29 against the yen at 6:57 a.m. GMT on Monday, down from last week’s high of 111.79 yen. The euro was at $1.1191, trading fairly stable despite the news that Italy will need to bail out two banks that the European Central Bank announced are “failing or about to fail.” The banks, Veneto Banca and Banca Popolare di Vicenza, have been allocated an $5.8 billion (5.2 billion euros) of resources in order to remain operative. Some analysts expect the bailout costs to rise as high as $19 billion.
Asian Markets Move Higher
Asian stocks were higher on Monday morning with MSCI’s broadest index of Asia-Pacific shares outside Japan gaining 0.4 percent and Japan’s Nikkei 225 gaining 0.1 percent. Hong Kong’s Hang Seng Index was also up 0.45 percent. Some global markets will be closed on Monday to celebrate the end of the Ramadan holiday.
Oil prices moved slightly higher during Monday’s Asian session despite the continued increase in U.S. oil rigs and confirmation that the U.S. added 11 new rigs last week. Brent crude futures were up 1.05 percent to $46.02 per barrel while U.S. WTI futures were up 1.07 percent to $43.47 per barrel. With support hovering near the $40 mark traders are concerned that U.S. production will not slow down until the support level is reached, jeopardizing the efforts of OPEC’s widespread production cuts and contributing to oversupply which will impact prices long after U.S. production slows.