Dollar Lacks Direction Ahead of FOMC and GDP This Week

Snapshot: 

        -U.S. stock futures lower; dollar lower; 10-year Treasury yield at 2.256%; Nymex at $47.95; gold at $1102.20
        -Watch for: durable goods report; Texas manufacturing survey; earnings from Restaurant Brands, Wynn Resorts, Baidu
        News: China Stocks Suffer Sharpest Daily Fall Since 2007; Teva to Buy Allergan Generics for $40.5 Billion; Iran's Past Nuclear Work Clouds Deal
        The dollar was lower against the yen and the euro in Asia trade Monday, ahead of closely-watched events later this week including the Fed meeting and GDP data.
        The greenback lacked clear direction earlier in the session but its downward bias grew, with the Nikkei Stock Average extending its losses, inviting a flight to perceived safety of the Japanese currency.
        "The yen is being bought as stocks remain weak," said Kenji Yoshii at Mizuho. Investors were already taking a wait-and-see stance ahead of the FOMC and other events, he said.
        In Europe, the euro rose 1.0% against the dollar to $1.1095. The common currency has recently tended to rise at times of market stress. Rock-bottom interest rates in the eurozone mean investors borrow in euros to fund riskier bets elsewhere, said Sam Lynton-Brown at BNP Paribas. When risks rise they back out of these bets, buying euros to repay their borrowings, he said.
        In bond markets, eurozone debt seen as riskier by investors weakened modestly. Spanish and Italian 10-year bond yields rose slightly to 1.94% and 1.90% respectively.
        U.S. stocks looked on track to join in a global selloff that's been led by a sharp slide for markets in China, where investors worried about a slowdown in government buying and disappointing industrial data.
        The main U.S. benchmarks were set to just edge lower at the open, but still on track to add to last week's sizable losses, as investors wait for a fresh reading on demand for big-ticket items, as well as quarterly earnings from companies like Norfolk Southern.
        S&P 500 futures were last down 1.60 points, or 0.1%, to 2,076, while those for the Dow fell 15 points, or 0.1%, to 17,508. Nasdaq futures declined by 7.75 points, or 0.2%, to 4,554.
        "The S&P 500 last week failed to break above its May all-time high, and the benchmark now is nearing support near the 2,044 level, said Katie Stockton at BTIG. But she hasn't turned bearish.
        "We think the propensity of investors to believe that each pullback is the beginning of something much worse is actually healthy, and generally speaking, we view pullbacks as opportunities to add exposure to stocks closer to support," she said.
        Oil prices kicked off the week in the red, pressured by a rout in Chinese stock markets and continuing worries about the world-wide oversupply of crude.
        Brent crude, the global oil benchmark, fell 0.3% to $54.44 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures for delivery in September were trading down 0.4% at $47.95 a barrel.
        Oil markets are on high alert for any signs of negative impact on the real economy of China, said Michael Wittner at Societe Generale. China is the world's second-largest consumer of oil after the U.S.
        Gold rose 1.5% to $1,102.20 an ounce.
        China Stocks Suffer Sharpest Daily Fall Since 2007
        China stocks plunged 8.5%, their sharpest daily percentage decline since 2007, as worries mount that authorities are pulling back on measures to prop up the market.
        Teva to Buy Allergan Generics for $40.5 Billion
        Teva Pharmaceutical Industries said it would buy Allergan's generics unit for $40.5 billion in cash and stock, in a deal that will vault the Israeli company into the top ranks of global drug makers.
        Record Fine for Fiat Chrysler
        Federal regulators hit Fiat Chrysler with a record $105 million fine for recall lapses covering millions of vehicles, adding to mounting scrutiny of the auto maker's safety practices.
        Iran's Past Nuclear Work Clouds Deal
        An Obama administration assessment of the Iran deal provided to Congress has led a number of lawmakers to conclude the U.S. and world powers will never get to the bottom of the country's alleged efforts to build a nuclear weapon.
        Obama Eyes New South Sudan Sanctions
        The Obama administration is poised to levy new sanctions aimed at pressuring South Sudan's rival leaders if they don't accept a peace deal by a mid-August deadline.
        Iraqi Forces Retake Anbar University
        Iraqi government forces recaptured Anbar University from Islamic State militant group after hours of fierce clashes as part of its push to reclaim territory across the embattled province.
        EU Refers France to Court for Failing to Recover Aid from Airlines
        The European Union referred France to the bloc's highest court for failing to recover almost 10 million euros ($11 million) in illegal aid from two low-cost airlines.
        Write to Sarka Halas at sarka.halas@wsj.com
        (END) Dow Jones Newswires

        July 27, 2015 06:06 ET (10:06 GMT)

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