The US dollar weakened sharply in anticipation of OPEC meeting
The US dollar in the Asian session on Monday sharply weakened against the Japanese yen and other currencies. Uncertainty about oil production dynamics intensified wave of profit-taking after the growth of the dollar against the backdrop of the US election results.
Against the US dollar the yen fell more than 1.6%.
Saudi Arabia has refused to participate in the meeting scheduled for Monday, OPEC members with non-member countries in the organization, including Russia, which increased doubts about the achievement of productive arrangements to reduce oil production in the OPEC meeting on Wednesday.
"The guys are very nervous about the situation with the oil, which affects the course of the sensitive currency pair (USD / JPY)"- said Stephen Innes from Oanda. This uncertainty increases investor demand for safe-haven asset is considered to be the yen, he added.
A number of US economic data that will be presented this week also led to profit-taking after the extinction of the hype about the economic policy of Trump.
"We are seeing the closure of the newly formed position of excessive"- Marita said Ueda of FX Prime byGMO.
As at 03.15 GMT, the dollar / yen was trading at 111.86 after falling to 111.35 earlier in the session. On Friday night in New York, the pair is trading at 113.20. The US dollar was also lower against other Asian currencies, including the Chinese yuan and the Singapore dollar, although its fall against the yen was the strongest. the WSJ Dollar Index, reflecting the US dollar's value against a basket of major currencies, fell 0.57%, to 91.26. The dollar / yen was trading at 1.0657 against 1.0575 late Friday.
The dollar showed a strong growth after winning Trump, as market participants expect that the new administration will increase budget spending and reduce taxes in order to increase inflationary pressures. This is likely to force the Fed to raise short-term interest rates are more likely than originally expected.
Investors partly understand the reasons for the growth of the dollar up to 8-month highs against the yen, which was observed last week, but they can not explain it completely, said Koji Fukaya from FPG Securities. The recent rise of the US stock market based solely on the expectations and the increase in profitability of US government bonds, pushing up the dollar will eventually slow down the US economy, he said.
"I do not expect the dollar to continue growth projections for Trump's actions. Investors should be prepared for a reversal and turbulence in the market"- said Fukaya.
According to a at Mizuho Securities Cango Suzuki, the dollar will continue to be vulnerable after recent gains.
"It is very likely that the correction phase has already begun", - he said.
However, in addition to the OPEC meeting, the dollar later this week waiting for a series of other events and economic indicators - from the manufacturing ISM data and data on the number of jobs before the referendum in Italy, Suzuki said. These factors probably contributed to the greenback in the coming week.
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