Dollar firms on Fed rate hike talk, eyes on Trump

Posted March 01, 2017

The dollar was firmer around ¥112.30 in late Tokyo trading Tuesday, with investors refraining from active trading to await a congressional speech by U.S. President Donald Trump. The dollar slipped 0.3 percent to 112.43 yen but still held above Monday's nadir of 111.920, which was its lowest since February 9. A drop in US interest rates in after-hours trading also weighed on the dollar.

The dollar was up 0.05% against a basket of major currencies ahead of Trump's speech and comments from Federal Reserve officials also expected this week. The pair has made session high at 1.0630 and hit lows at 1.0580 levels. On the data front, Canadian producer prices rose for the fifth month in a row in January, increasing by 0.4 percent from December on higher prices for energy and petroleum products, Statistics Canada said on Tuesday. The aussie rose versus its U.S. counterpart to reach 0.7690 after data showed that Australia posted its narrowest current account deficit since 2001 during the December quarter.

Oil futures dipped as OPEC-led output cuts were offset by concerns about increasing United States crude production.

The euro edged up just 0.1 percent on Monday to $1.0575, as concerns that far-right anti-EU leader Marine Le Pen could win France's upcoming presidential election continued to weigh on the single currency.

Early focus is on Washington, where President Trump is due to address both houses of Congress, with investors hoping he will provide details of his economic plans.

The Dow Jones Industrial Average fell 25.2 points, or 0.12 per cent, to close at 20,812.24, breaking a 12-day run of record closing highs.

Trump met US state governors at the White House on Monday and said he sees "big" infrastructure spending and is seeking a military spending hike of more than 9 per cent.

UK's benchmark FTSE 100 closed up by 0.4 percent, the pan-European FTSEurofirst 300 provisionally closed up by 0.28 percent, Germany's Dax ended up by 0.2 percent, France's CAC finished the day up by 0.2 percent. The yield on benchmark 10-year U.S. Treasuries, which had slumped to more than five-week lows last week, stood at 2.363 percent in Asian trade, not far from their U.S. close of 2.367 percent on Monday.

US 30-year Treasury bonds were last up 8/32 in price to yield 2.972 percent, from a yield of 2.985 percent late Monday. Two-year notes US2YT=RR were last down 1/32 in price to yield 1.169 percent, from a yield of 1.145 percent late Friday.

The S&P 500 Index declined 0.3 percent Monday, paring the best monthly gain since March to 3.7 percent.

The greenback reversed earlier weakness and the Japanese yen weakened, indicating a perception that a rate hike is more likely in coming months. Japan's Nikkei stock index pared its gains but still ended up 0.1 percent, up 0.4 percent for February and almost flat for the year to date, as investors awaited Trump.