Dollar hits 7-month low, stocks retreat in ECB meet
SINGAPORE: The coming testimony of the former FBI director, British elections and a European Central Bank meeting all took their toll on oil, the dollar and Asian stocks on Tuesday.
European stocks were headed for a subdued start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 and France’s CAC 40 to open flat.
Germany’s DAX is predicted start the day down 0.1 per cent.
US crude was 0.5 per cent lower at $47.18 a barrel on Tuesday, after falling 0.55 per cent on Monday.
Global benchmark Brent retreated 0.4 per cent to $49.26, extending to Monday’s 1 per cent slide.
The dollar index touched a sevenmonth low ahead of testimony before the US Congress from former FBI director James Comey on Thursday.
There will be intense interest in what Comey might say about his conversations with US President Donald Trump about an investigation into former National Security Adviser Mike Flynn, who was fired for failing to disclose conversations with Russian officials.
“The dollar is already on the defensive after Friday’s jobs data, and now it’s facing potential geopolitical risk in the form of Comey’s testimony,” said Bart Wakabayashi, Tokyo Branch Manager of State Street Bank.
The dollar index, which tracks the greenback against a basket of tradeweighted peers, fell to its lowest level since the November US election.
At 0524 GMT, it was down 0.2 per cent, to 96.611.
The dollar slid 0.5 per cent to 109.90 yen on Tuesday, close to the six-week low hit earlier in the session.
News on Monday of US services sector activity slowing in May as new orders tumbled also hit the dollar.
The dollar further came under pressure from a stronger euro, on expectations the European Central Bank will take a less dovish tone than in the past at its Thursday meeting.
The ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four people with direct knowledge of the discussions told Reuters last week.
The common currency was 0.1 per cent higher at $1.127 on Tuesday.
Sterling advanced 0.2 per cent to $1.293 on Tuesday.
The lead of British Prime Minister Theresa May over the opposition Labour Party ahead of Thursday’s general election has narrowed to just 1 per centage point, according to a poll conducted before the attacks in London on Saturday.
Other polls in have found bigger Conservatives of up points.
“Even if May does just about enough to increase the majority — that could still potentially be sterling positive,” said ING currency strategist Viraj Patel.
The weaker dollar lifted gold, with spot gold hitting a six-week high earlier on Tuesday and last trading up 0.4 per cent at $1,284.74 an ounce.
MSCI’s broadest index of AsiaPacific shares outside Japan lost 0.15 per cent, pulling back from a two-year high hit on Monday.
Japan’s Nikkei dropped 0.6 per cent, tripped by a stronger yen.
South Korean markets were closed for a holiday.
Australian shares tumbled 1.4 per cent.
The Australian dollar pared earlier recent leads for to 11 and days the 12 losses — made after the secondquarter current account deficit disappointed investors hoping for a surplus — to trade flat at $0.7489 after the Reserve Bank of Australia kept its benchmark rate at a record low 1.5 per cent, as expected.
Chinese shares and Hong Kong shares bucked the trend, rising almost 0.1 per cent and 0.35 per cent respectively.
Overnight, Wall Street indexes slipped between 0.1 per cent and 0.2 per cent, with IT giant Apple Inc leading losses on the Dow Jones Industrial Average.