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(Bloomberg) -- The dollar dropped to a fresh low for the day, declining versus most peers as WTI crude oil rose to highest since July 2015 and other commodities staged broad gains.
The greenback was lower against most of its G-10 peers and a majority of emerging-market currencies as mild losses spread. WTI crude oil rose to the highest in more than two years after Saudi Arabia said a weekend attempted missile strike at Riyadh’s airport could be an act of war by Iran. The incident adds to concerns about political stability in the world’s largest oil producer after a weekend purge saw dozens of high-ranking officials arrested in an anti-corruption drive.
A rally in European government bonds outpaced gains by Treasuries, widening the yield spread in favor of the greenback and ensuring the euro underperformed. Trading flows were mostly muted outside of emerging-market currencies, which showed some strength after posting steep losses late last week. The yen rose to a fresh high versus the greenback after falling to its lowest since March overnight.
The Turkish lira led advances by emerging-market currencies, gaining the most in almost a month. It extended gains after a report that the U.S. had begun processing a limited number of visa applications in that country.
- A light U.S. data calendar this week begins with JOLTS data on Tuesday, leaving investors to focus on tax reform efforts for now. House tax chief Kevin Brady said his plan may revise the carried interest tax break that benefits investment managers. Meanwhile, New York Fed President Dudley’s plans to retire in 2018 fueled trader debate on how the policy bias at the central bank may shift further, with Powell also set to succeed Yellen as chair
- USD/JPY was trading at ~113.82, near a a fresh low at 113.76. The pair had reached a 114.73 peak set in Asian trading, which saw long-standing stop-loss buy orders and stop-entry orders tripped above 114.50, according to traders in the region. USD gains came after BOJ’s Kuroda reiterated his commitment to expansionary monetary policy in order to achieve the bank’s inflation goal. While offering little new insight, the remarks provided a catalyst for yen-selling that was slowed by Japanese exporter offers, traders said. Intraday USD longs set on the break above 114.50 quickly unwound when the dollar failed to sustain its gains, traders in London said
- EUR/USD rebounded to trade above 1.1600 after setting a new daily low at 1.1580. The low approached the October base at 1.1575 that is seen as pivotal support. The pair is cushioned by bids ahead of 1.1575, though may see stop-loss selling on a break below, traders say. European bond yields declined ~2-3bps in Monday’s session, outpacing smaller declines in the U.S. A further widening of spreads in favor of the dollar could see EUR/USD test the July 20 low at 1.1479
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