© Reuters. Illustration photo of US dollar and Japan Yen notes
By Tom Westbrook
SINGAPORE (Reuters) – The dollar was ready to record its fourth consecutive monthly drop on Monday, its longest streak since the summer of 2017, while the yen stood firm after a longtime lieutenant for Shinzo Abe reportedly joined the race to succeed him as Japan’s leader.
Yoshihide Suga, Chief Cabinet Secretary for Abe, is expected to extend the tax and monetary stimulus that defined Abe’s term.
Kyodo reported that he intended to run after the leadership on Sunday, citing a named source. TV Tokyo reported that he had announced party support at a Saturday meeting.
Elsewhere, the dollar was stable after some pressure in the morning after another round of strong sales late last week.
The Australian dollar
A speech last Thursday in which Federal Reserve Chairman Jerome Powell outlined a welcoming shift in the central bank’s approach to inflation has weighed on the greenback, as investors interpreted it as meaning that rates would remain lower for longer.
In August, the dollar has fallen almost 1.3% against a basket of currencies () and approx. 1% against the euro, after falling more than 10% against both since March.
“It seems clear that we are at the beginning of a multi-year period of dollar fall, from very elevated levels,” wrote Societe Generale (OTC 🙂 strategists Kit Juckes and Olivier Korber in a forecast note.
“Our doubts about whether the dollar will suffer a broad fall amid risk aversion, global recession and especially new market weaknesses have been shattered by the Fed.”
They said the euro has “gone too fast too fast” and will remain stable for the rest of the year, but rise to $ 1.25 in September 2021. The yen could then rise to 100 per cent. Dollars at the time they predict, and to $ 0.76.
Euro () was down 0.1% to $ 1.1921 early in the Asia session. Sterling
In addition to Japanese politics, investors are following U.S. polls this week in the wake of political party conventions and, on the data front, purchasing leaders’ index numbers in China and across major economies, as well as Friday’s U.S. paycheck.
China’s official PMI figures appear at 0100 GMT and is expected to show that factory activity expanded faster in August than in July.
Eyes are also on posts from several other U.S. Federal Reserve officials beginning with Richard Clarida at. 1300 GMT on Monday and Raphael Bostic at. 1430 GMT for any clues about the details of the new inflation method.
“This week could see continued dollar weakness as the market looks for hints of the new framework,” Barclays (LON 🙂 analysts wrote in a note. Resumption at the turn of the month can also lead to weakness at the beginning of the week.