Dollar at two-month high ahead of Fed, Brexit knocks pound lower

Dollar at two-month high ahead of Fed, Brexit knocks pound lower

On Monday, the 29th of July 2019, a majority of US stock indices had backed off of their all-time record closures, as investors appeared to be taking a breather ahead of an anticipated interest rate cut by the US Central Bank, meanwhile staring at the stars for further directions in context of a growing pessimism between Washington and Beijing.

Futures for the pan-region Euro Stoxx 50 and Germany's DAX were down about 0.2% in early deals, though London's FTSE futures were a shade higher.

The Fed isn't the only central bank in focus this week however, as markets await the Bank of England's (BoE) own policy decision on Thursday.

The dollar index.DXY against a basket of six major currencies was a shade higher at 98.106 and not too far from 98.165, a two-month top scaled on Monday on the back of better-than-expected U.S. GDP data.

MSCI's All Country World Index of stocks, down by as much as 0.2% on the day, erased some losses to trade 0.02% lower.

On Wall Street, Amazon and Facebook weighed down the S&P 500 while Dow component Apple rose a day ahead of earnings.

Shares of Genomic Health rose almost 3.5 percent, as USA cancer diagnostics company Exact Sciences will buy the US genetic research firm in a cash and stock deal at 2.8 billion US dollars, which aims to boost Exact Sciences' capability of testing cancer. -China trade negotiations due to begin in Shanghai on Tuesday, although expectations for progress during the two-day meeting are low with the markets hoping the two sides can at least detail commitments for "goodwill" gestures.

"Both parties know they are running out of time to prevent a sharper slowdown in the global economy".

The PCE chain price index advanced 2.3 percent (1.4 percent y/y) after rising 0.4 percent in Q1.

On the stock markets, Asian benchmarks were broadly lower, with the exception of the ASX 200, which was up 0.21 percent.

All this underlines the fact that the USA economy is doing well and performing "near trend growth" with an unemployment rate that's near a 50-year low notwithstanding all the uncertainty that is caused by the trade tensions/disputes, which logically weigh on business investment.

The Japanese yen weakened 0.12% versus the greenback at 108.82 per dollar.

Building expectations that the European Central Bank may turn out to be more aggressive than the Fed in easing monetary policy contributed to euro falls.The pound was the biggest mover in the foreign exchange market, plunging to a new 28-month low of $1.2120 in Asian trading on growing concerns that Britain could crash out of the European Union without a transition agreement on October 31.Sterling was last down 0.3% at $1.2183.

The pound last traded at US$1.2379, having slipped to US$1.2375 in early trade.

But on Friday Trump offered a pessimistic view of reaching a trade deal with China, saying Beijing may not sign one before the November 2020 USA presidential election in hopes that a Democrat who will be easier to deal with, will win. -China talks and the prospect of slower economic growth globally that could reduce demand for crude.

The Dow Jones Industrial Average rose 28.9 points, or 0.11%, to 27,221.35, the S&P 500 lost 4.89 points, or 0.16%, to 3,020.97 and the Nasdaq Composite dropped 36.88 points, or 0.44%, to 8,293.33.

Brent crude futures eased 0.41% to $63.20.

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