The U.S. dollar weakened on Trump Jr. Emails; Yen, Korean won lead currency gains 

The U.S. dollar weakened against its G-10 peers and European equity futures rose as attention turned to central bank policy after markets were rattled by reports of Donald Trump Jr.’s contact with a Russian lawyer.

U.S. equity futures were lower after the S&P 500 Index recovered from a sudden loss to end Tuesday flat. A gauge of the dollar fell for a third day and Treasuries rose. The pound slid following a report that Bank of England Deputy Governor Ben Broadbent said he wasn’t ready to support a rate hike. The yen rose a second day and shares in Asia were mixed. Oil bounced on reports of a decline in stockpiles, though it remains in a bear market, and gold was higher.

Investors are awaiting testimony from Federal Reserve Chair Janet Yellen and the start of corporate earnings season after markets were jolted Tuesday. The catalyst was the release of emails by Trump Jr. that said the Russian government backed his father’s presidential campaign and was trying to damage Hillary Clinton.

Fed Governor Lael Brainard signaled she’s comfortable about pushing ahead with plans to start shrinking the balance sheet soon. The Bank of Canada is expected to hike interest rates Wednesday, a chance to mark a concrete step in a tightening cycle by many of the developed world’s central banks.

Here’s what investors are watching:

• Yellen gives testimony Wednesday and Thursday, with investors looking for guidance on when the Fed could start reducing its balance sheet.
• JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report results this week.
• The U.K. is due to publish its Repeal Bill on EU membership this week.

These are the main moves in markets:

Currencies

• The yen rose 0.5 percent, the most in a week, to 113.43 per dollar as of 3:15 p.m. in Tokyo. The Korean won jumped 0.5 percent to 1,145.35 per dollar, leading the pack of Asian currencies.
• The Bloomberg Dollar Spot Index slid 0.1 percent. The Canadian dollar gained 0.1 percent, and the euro was steady after paring gains. The pound was down 0.2 percent.
• The onshore yuan climbed 0.2 percent, the most this month, to 6.7894 per dollar.

Stocks

• Euro Stoxx 50 futures rose 0.3 percent and FTSE 100 futures jumped 0.4 percent. S&P 500 futures were down 0.1 percent.
• Japan’s Topix Index lost 0.5 percent and Australia’s S&P/ASX 200 Index declined 1 percent. Hong Kong’s Hang Seng Index climbed 0.6 percent to above the key 26,000 mark, led by banks. The Shanghai Composite Index fell 0.5 percent.
• Pakistan’s KSE100 dropped 0.2 percent after falling 4.7 percent Tuesday, when investigators recommended a trial against Prime Minister Sharif and his two sons.

Bonds

• The 10-year U.S. Treasury yield dropped two basis points to 2.35 percent. The yield on Australian 10-year bonds also fell two basis points, to 2.73 percent, halting five days of gains.
• The Bank of Japan raised outright purchases of 3-5 year government notes to contain a recent increase in medium-term yields.

Commodities

• WTI crude climbed 1.9 percent to $45.90 a barrel.
• Gold was up 0.2 percent at $1,220.44 an ounce and silver rose 1 percent to $15.90.

Source: Bloomberg – Dollar Weaker on Trump Jr. Emails; Focus on Yellen: Markets Wrap

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