The dollar was weaker in Monday’s Asian trading as stocks across Asia opened lower on continued uncertainty about China and a US rate hike. On Friday, speaking at the Jackson Hole annual symposium, Fed Vice Chairman Stanley Fischer said that the effects of the rising dollar and falling oil prices have already started to fade and inflation is expected to head higher. This left the possibility of a September rate rise open, pushing the dollar higher in Friday’s trade. When asked about China, Fischer said that it was too early to assess the impact of recent events in China and in global markets on the US economy.
Chinese stocks cut earlier losses to stand around 1.5% lower in late Asian trading on Monday. Shares had gained around 10% on Thursday and Friday after suspected intervention by Chinese authorities.
The dollar rebounded from an earlier low of 120.87 yen to climb to 121.20 yen in late Asian session, though it was still off Friday’s high of 121.66 yen. Weak industrial production data had little impact on the yen, which is being driven higher by risk aversion. Industrial production in Japan fell by 0.6% month-on-month in July, which was below estimates of a 0.1% rise.
The euro started today’s Asian session higher but dropped back as the dollar attempted a rebound. The single currency had climbed as high as 1.1262 before easing to 1.1225. Against the pound, the euro was trading at 0.7276. Cable recovered from Friday’s low of 1.5334 to rise to 1.5422 in late Asian trading.
Retail sales in Germany beat estimates, rising by 1.4% month-on-month in July, versus forecasts that they would rise by 1.3%, suggesting that strong consumer spending should support the Germany economy even if exports take a hit from slower Chinese growth.
Oil was weaker on Monday after rallying over 16% on Thursday and Friday. Growing optimism on the strength of the US economy as well as rising tensions in Yemen had pushed crude oil prices higher in recent days. WTI crude futures were 1.4% lower on Monday at $44.59, while Brent crude was down 1.6% at $49.23.
Looking ahead to the rest of the day, European trading volumes are expected to be thin due to a Bank Holiday in the UK. Eurozone flash estimates of August CPI will be the main focus in European session, while in the US, the Chicago PMI for August will be closely watched.