The dollar was mostly flat on Monday as it held on to Friday’s gains when it bounced back from the losses after the Fed kept interest rates unchanged at record low levels on Thursday. The euro moved modestly higher in Asian trading following Syriza’s win in the Greek general election on Sunday. Earlier in the week, polls had indicated that Alexis Tsipras’ party was running neck-and-neck with the New Democracy party. Tsipras fell short of a majority and will need to form a coalition with one of the smaller parties.
Over the weekend, another ECB official, Peter Praet, reiterated the central bank’s readiness to adjust its quantitative easing program if necessary, putting pressure on the euro. The single currency moved away from Friday’s low of 1.1269 dollars to climb to just above the 1.13 level in late Asian session. The dollar was back below the 120 handle against the yen at 119.98, having opened at 120.10 yen. The pound followed the euro higher against the euro to rise to 1.5545 dollars in late Asian trading.
Asian stocks followed US and European equities lower on Monday with the exception of China where the main indices were around 1% higher. Tokyo markets are closed due to a 3-day national holiday in Japan.
Oil prices posted a small rally on Monday on slowing US production. The number of rigs in operation fell for a third week as US producers cut back on investment due to the lower oil prices. Oil futures were over 1% higher in late Asian trading with WTI futures climbing to $45.29 and Brent futures rising $48.02.
With little economic data on today’s agenda, German producer prices were the main data this morning. German PPI fell by 0.5% m/m in August, which was below estimates of -0.3%.
The rest of the day will be fairly quiet with only existing home sales in the US to attract some attention. A speech by Atlanta Fed President Dennis Lockhart late in the US session could be interesting to watch on any indications of future Fed policy post the September FOMC meeting.