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PIG TODAY-Dollar rebounds in step with stocks’ attempt to halt skid

The dollar rebounded mildly Tuesday in step with what might be the first gain for the Dow industrials in nine sessions, although the stock advance remained vulnerable.

“The dollar rebounds with markets in digestion mode in the aftermath of last week’s failure of the health-care reform measure in the U.S. and its impact on the so-called ‘Trump trade,’” said Ilya Spivak, currency strategist with Daily FX.

The ICE Dollar Index DXY, +0.06% , which measures the currency against a basket of six major rivals, rose 0.1% to 99.31. On Monday, at session lows it hit 98.86, the lowest mark since Nov. 11, according to FactSet data.

The dollar USDJPY, -0.23% traded little changed against the Japanese yen to ¥110.55, from ¥110.66 late Monday in New York. The dollar had improved to ¥110.67 earlier.

The euro EURUSD, -0.1013% fell to $1.0853 from $1.0864, while the British poundGBPUSD, -0.0319%  moved up to $1.2560 from $1.2558.

The health-care vote setback for the White House has increased uncertainty over the administration’s ability to push through its broader policy agenda, prospects for which had rallied stocks to repeat record highs until the latest skid. The reversal has added momentum to an unraveling of support for the dollar.

A heavy line-up of Federal Reserve speakers could return some focus on monetary policy over fiscal policy, although where one impacts the other has been of increased interest to financial markets. Fed Chair Janet Yellen speaks at 12:50 Eastern. Kansas City Fed President Esther George, who does not hold an interest-rate vote this year, speaks at 12:45 Eastern. Dallas Fed President Rob Kaplan, a voter, speaks at 1 p.m. Eastern. Fed Vice-Chair Stanley Fischer appears on CNBC between 1:30 and 2 p.m. Eastern, rounded out by an appearance for Fed Gov. Jerome Powell, at 4:30 p.m. Eastern.

“Fiscal-policy uncertainty is no less a problem for central bank officials than it is for markets, however, so clear-cut guidance with lasting U.S. dollar follow-through seems unlikely,” said Spivak.

The Fed raised interest rates two weeks ago and is expected to hike rates at least two more times, according to the policy makers’ own forecasts. But the accompanying statement and the press conference by chief Janet Yellen were seen as less hawkish than anticipated, with the Fed not building up expectations for faster rate hikes, and that weighed on the dollar so far this month.

The Fed funds futures market are currently pricing in two more rate hikes by December and higher interest rates are usually supportive of the dollar.

Meanwhile, South Africa’s rand, one of the year’s best-performing currencies, remained active after its Monday plunge.

The dollar USDZAR, +1.7188%  was trading at 12.9986 rand early Tuesday compared to 12.7821 late Monday in New York, up another 1.7%.

The rand was knocked sharply lower on Monday after President Jacob Zuma ordered Finance Minister Pravin Gordhan to return home immediately from an investor roadshow abroad that was reportedly not authorized by the government.

In a Tuesday tweet, Bloomberg’s Africa desk reported that Zuma was said to say he’s “firing” Gordhan.

Source: marketwatch.com

The dollar rebounded mildly Tuesday in step with what might be the first gain for the Dow industrials in nine sessions, although the stock advance remained vulnerable.

“The dollar rebounds with markets in digestion mode in the aftermath of last week’s failure of the health-care reform measure in the U.S. and its impact on the so-called ‘Trump trade,’” said Ilya Spivak, currency strategist with Daily FX.

The ICE Dollar Index DXY, +0.06% , which measures the currency against a basket of six major rivals, rose 0.1% to 99.31. On Monday, at session lows it hit 98.86, the lowest mark since Nov. 11, according to FactSet data.

The dollar USDJPY, -0.23% traded little changed against the Japanese yen to ¥110.55, from ¥110.66 late Monday in New York. The dollar had improved to ¥110.67 earlier.

The euro EURUSD, -0.1013% fell to $1.0853 from $1.0864, while the British poundGBPUSD, -0.0319%  moved up to $1.2560 from $1.2558.

The health-care vote setback for the White House has increased uncertainty over the administration’s ability to push through its broader policy agenda, prospects for which had rallied stocks to repeat record highs until the latest skid. The reversal has added momentum to an unraveling of support for the dollar.

A heavy line-up of Federal Reserve speakers could return some focus on monetary policy over fiscal policy, although where one impacts the other has been of increased interest to financial markets. Fed Chair Janet Yellen speaks at 12:50 Eastern. Kansas City Fed President Esther George, who does not hold an interest-rate vote this year, speaks at 12:45 Eastern. Dallas Fed President Rob Kaplan, a voter, speaks at 1 p.m. Eastern. Fed Vice-Chair Stanley Fischer appears on CNBC between 1:30 and 2 p.m. Eastern, rounded out by an appearance for Fed Gov. Jerome Powell, at 4:30 p.m. Eastern.

“Fiscal-policy uncertainty is no less a problem for central bank officials than it is for markets, however, so clear-cut guidance with lasting U.S. dollar follow-through seems unlikely,” said Spivak.

The Fed raised interest rates two weeks ago and is expected to hike rates at least two more times, according to the policy makers’ own forecasts. But the accompanying statement and the press conference by chief Janet Yellen were seen as less hawkish than anticipated, with the Fed not building up expectations for faster rate hikes, and that weighed on the dollar so far this month.

The Fed funds futures market are currently pricing in two more rate hikes by December and higher interest rates are usually supportive of the dollar.

Meanwhile, South Africa’s rand, one of the year’s best-performing currencies, remained active after its Monday plunge.

The dollar USDZAR, +1.7188%  was trading at 12.9986 rand early Tuesday compared to 12.7821 late Monday in New York, up another 1.7%.

The rand was knocked sharply lower on Monday after President Jacob Zuma ordered Finance Minister Pravin Gordhan to return home immediately from an investor roadshow abroad that was reportedly not authorized by the government.

In a Tuesday tweet, Bloomberg’s Africa desk reported that Zuma was said to say he’s “firing” Gordhan.

Source: marketwatch.com

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