The U.S. dollar is up against most of its G10 partners, despite American equity futures notching slightly higher.
Overview
The risk mood in Asia is negative as Chinese stocks fell in Hong Kong to their lowest levels since 2008. China’s President Xi Jinping stacked his leadership ranks with “yes men” as his grip on the nation’s politics grew tighter. Xi’s policies are not market-friendly and his ability to move forward with them is now easier than ever. Domestically, earning season continues with major technology companies set to report earning’s this week. Today’s economic docket is not overwhelmingly busy, so attention is likely to stay abroad. Early this morning, the Chicago Fed National Activity Index will hit the wire, followed by S&P Global US manufacturing, service, and composite PMIs.
What to Watch Today…
- S&P US Global PMIs at 9:45 a.m.
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JPY ⇓
USD/JPY experienced wild swings. Indeed, the Japanese yen gained nearly 3% in just minutes before reversing those gains. The move came after Japan’s Finance Minister Suzuki said that authorities will take necessary action to combat excessive, speculative moves.
The threat of another intervention was enough to spark strong yen buying but the move was short-lived as the yen gave back all its gains within the hour and is now nearly a full percent weaker versus the greenback.
GBP ⇑
The British pound had a spell of strength overnight but has since given back its gains and remains relatively unchanged from Friday’s close. The pop higher came after former Prime Minister Boris Johnson took himself out of the running to return to the Premiership. It appears that Rishi Sunak is the odds-on favorite to become the next Prime Minister of the U.K.
His remaining challenger, Penny Mordaunt, is mounting a last-minute effort to secure support. If Sunak prevails, he will become the fourth PM in just three years and will face the daunting challenge of stabilizing U.K. markets. In addition, he will need to try to reunite the Conservative party which has fallen out of favor with the British electorate.
