The US dollar clung on to Friday’s gains and was trading near 7½-month highs as the prospect of higher interest rates continued to support the greenback. On Saturday, San Francisco Fed President John Williams reinforced the view that the Fed is on course to raise rates at its next meeting. Williams said that if the Fed continues to get good data on the economy then there’s a “strong case to be made in December to raise rates”.
The greenback climbed back above 123 yen in today’s Asian session, hitting a high of 123.25 yen before easing slightly to 123.18 yen in late Asian trading.
Reports that the Japanese government is planning to raise the minimum wage in Japan to boost consumer spending had little impact on the yen. Raising the minimum wage by 3% is among a raft of measures the government is hoping to implement in a bid to stimulate domestic growth, including cutting the corporation tax. However, critics have said that the measures do not address the structural problems facing Japan’s economy.
The euro extended Friday’s slide in today’s Asian session following ECB President Mario Draghi’s comments that gave the strongest hint yet of extra stimulus in December. The single currency slipped back below 1.07 dollars and hit a fresh 7-month low of 1.0599. It was up slightly at 1.0625 against the dollar in late Asian trading, while against the pound it was up at 0.7012 from an earlier low of 0.6991.
The greenback also moved higher against sterling at 1.5151 dollars per pound and against the Canadian dollar at 1.3387 as the loonie continued to come under pressure on lower oil prices. Lower commodity prices also weighed on the aussie and the kiwi, which were down at 0.7177 and 0.6513 against the US dollar respectively.
Crude oil prices saw no respite on Monday as the strong dollar and oversupply concerns dragged prices to fresh 3-month lows. US crude oil was down at $40.59 in late Asian session. Copper prices fell to fresh 6½-year lows at $2.0102 per pound on weaker demand outlook from China.
Looking ahead to the rest of the day, the Eurozone flash PMI readings for November will be the only major data in European trading. In the US session, the US manufacturing flash November PMI and existing home sales data for October will be the main data of interest.