Euro falls back from 2-1/2 month highs, yuan nears 2019 low

Galtero Lara
Junio 12, 2019

"The only one that could really propel the market higher would be a trade deal with China or if the Fed comes in and surprises everybody by cutting interest rates in June", he said.

S&P500 mini futures rose 0.4% and the 10-year US Treasuries yield jumped back 3 basis points to 2.115 per cent, after hitting a 21-month low of 2.053 per cent on Friday on soft US jobs data.

The yen shed 0.3% to 108.65 after earlier hitting its weakest since late May, though it remains more than 3% stronger than its levels of April.

China's exports unexpectedly returned to growth in May despite higher USA tariffs, data showed on Monday, but many suspected the rise was due to firms front-loading shipments to avoid higher US tariffs.

"Still, with limited progress seen so far in U.S".

NEW YORK, June 10 (Reuters) - Equities around the world rose on Monday while U.S. Treasury prices fell as risk assets were in demand after the United States shelved plans to impose tariffs on Mexico, easing worries the global economy would face another trade war.

Goldman Sachs analysts noted that trade tensions had generally pushed the dollar higher this year and last.

That cautionary note was driven home by Chinese data on Monday morning showing imports in May contracted 8.5% from a year earlier, a much worse than expected outcome that signaled weak domestic consumption.

The yuan extended its losses after the data, while expectations the Fed will cut rates kept the dollar on the defensive after a weak jobs report from the U.S. Labor Department.

Those views were bolstered on Friday when data showed nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll, suggesting the loss of momentum in economic activity was spreading to the labour market.

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In currency trading, the dollar index rose 0.23%, with the euro down 0.15% at $1.1314. Just three months earlier, wages had been rising at their fastest rate in a decade.

Fed funds rate futures are still pricing in more than two 25-basis point rate hikes by the end of this year even after their retreat early on Monday after the US-Mexico migration deal.

Elsewhere in the currency market, the euro edged down 0.1 per cent to $1.1318, retreating from an 11-week high of $1.1348 touched on Friday. The greenback had weakened last week after poor economic data encouraged investors to scale up their bets that the Federal Reserve would soon cut interest rates.

Spot gold dropped 0.9% to $1,327.83 an ounce, after closing at its highest level since February on Friday.

The Chinese yuan was soft. The offshore yuan traded at 6.9385 yuan per dollar, having hit a seven-month low of 6.9616 on Friday.

Many investors are still clinging to hopes that Trump will meet Chinese President Xi Jinping on the sideline of Group of 20 leaders' meeting late this month to seek compromise on trade and other economic issues.

Ahead of the summit, G20 finance leaders on Sunday said that trade and geopolitical tensions have "intensified", raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening U.S.

-China trade tensions continued to threaten demand for crude and as major producers Saudi Arabia and Russian Federation had yet to agree on extending an output-cutting deal.

Brent futures rose 0.25% to $63.45 per barrel while USA crude futures gained 0.57% to $54.30.

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