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The USD Flat Ahead of Fed Chair Powell’s speech

Dollar Index: On Tuesday, the U.S dollar was flat in Asia amid low expectations of an aggressive interest rate cut.

A strong jobs report was released last week on Friday showing a sharp rebound in U.S job growth in June. The data lowered expectations that the Fed will cut interest rates by 50 basis points during the end of the July meeting.

The USD index remained unchanged at 96.977 by 1:12 AM ET (05:12 GMT).

Fed Reserve chairman Jerome Powel and other 10 U.S central bankers are set to speak this week. Minutes for the Fed’s June meeting are due on Wednesday.

There is a risk the Fed will not be as dovish as people thought. Central banks ahead of the curve in this cycle are Australia and New Zealand. The Fed is following, but the European Central Bank and the Bank of England are laggards,” said Masafumi Yamamoto, Chief Currency Strategist at Mizuho Securities in Tokyo.

There was a slight change in the GBP/USD pair at 1.2509. U.K GDP and Industrial Output figures are due on Wednesday. On Thursday, the BoE will also release a report on its financial stability.

According to the Reuters report, Boris Johnson has vowed to succeed on Brexit by Oct 31 even without transitional preparations to mitigate the shock. He is reportedly on course for a clear victory.

The USD/JPY pair was near flat at 108.72 as Japan-South Korea tension persists. Today, Japan’s Industry Minister Hiroshige Seko said that Japan would not withdraw restrictions on high-tech from South Korea imports from Japan.

Whether Japan implements additional measures, depends on South Korea’s response,” Seko told a news conference after a cabinet meeting.

According to Japan’s Ministry of Economy, Trade, and Industry, Tokyo “will apply updated licensing policies and procedures on the export and transfer of controlled items and their relevant technologies to (South Korea).”

The USD/CNY traded at 6.8815 and up 0.02%. On Wednesday, the National Bureau of Statistics will release its official June data on CPI and PPI. Q2 GDP is due over the weekend.

Asian shares fall as all bets are off on sharp U.S. rate cuts

On Monday, stocks around the world fell after strong data on U.S job gains faded expectations that the Fed would lower interest rate by the end of July.

U.S equities continued to slide further following the U.S job report.

U.S Stocks weighed down after Apple Inc shares (O: AAPL) recorded losses after an analyst downgrade. Boeing Co (N: BA) also contributed when it made losses following a Saudi Arabian airline said it wouldn’t proceed with an order for its jets.

European stocks also edged lower. The STOXX 600 (STOXX) finished down 0.1%. Deutsche Bank’s (DE: DBKGn) announcement that it would cut 18,000 jobs globally in a restructuring plan which dragged down bank shares.

MSCI’s gauge of emerging market equities (MSCIEF) fell 1.3% as Asian shares closed lower and the dollar edged up in reaction to dampened expectations for a sharp Fed rate cut.

Morgan Stanley- U.S Investment bank’s decision to reduce its exposure to global equities also weighed on investor sentiments. The bank had misgivings about its policy’s ability to offset weak economic data.

U.S. Treasury debt yields also dropped, after gaining on Friday in response to the U.S. employment data.

The Dow Jones Industrial Average dropped 0.48% or 129.76 points to 26,792.36. The S&P 500 lost 0.55%, or 16.54 points to 2,973.87. The Nasdaq Composite dropped 0.84% or 68.52 points to 8,093.28.

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