Dollar Little Changed as Focus Moved to Fed

 
Snapshot: 

        -Dollar flat; 10-year Treasury yield at 2.44%; U.S. stock futures slip; Nymex crude at $51.10; gold at $1153.00
        -Watch for: NFIB small business index, retail sales, import/export prices; May trade inventories; earnings from J.P. Morgan, Wells Fargo, Johnson & Johnson, Yum Brands, CSX
        News: Iran Nuclear Deal Reached; U.S. Finds 'No Single Cause' of Treasurys Tremor; Factory Output Across Eurozone Fell in May
        In the foreign exchange markets, the euro was marginally higher against the dollar in early European trade at $1.1019, following a sharp drop lower Monday of 1.5%.
        The dollar was almost flat against the yen and the euro in a rangebound Asia trade, with cautious investors avoiding taking strong positions ahead of events in the U.S. that could shape investor views on any likely decision by the Federal Reserve to lift short term rates this year.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was unchanged at 87.78.
        BNP Paribas strategists said that diminishing concerns surrounding Greece was fueling expectations that the Federal Reserve will start raising interest rates in 2015.
        The yield on the 10-year Treasury remained close to recent highs after Monday's EU debt deal with Greece led to a decline in risk aversion.
        The focus now turns to Wednesday's appearance of Janet Yellen before Congress, where Barclays expects her to reiterate the rather hawkish comments made Friday which led markets to price in around a 40% chance of the Fed hiking rates in September. At 5.56am ET, the 10-year yield was at 2.44%, according to data supplied by CQG.
        European debt markets were broadly steady. The yield on Italian 10-year bonds was at 2.12%, in line with the yield on Spanish 10-year bonds, both slightly higher on the day.
        The yield on 10-year German bonds was at 0.81%, around 0.04 of a percentage point lower on the day.
        In Greece, the yield on two-year debt, which has fallen sharply in recent days, was around 0.5 of a percentage point lower at just under 24%. Two-year debt is particularly sensitive to short-term default expectations, but trading in Greek government bonds remains very limited.
        Wall Street looks set to break a three-session winning streak, with energy companies heading south premarket after an Iranian nuclear deal stoked fears of oil-market oversupply.
        Futures for the Dow Jones Industrial Average slipped 11 points, or 0.1%, to 17,889, while those for the S&P 500 index lost 1.40 points, or 0.1%, to 2,093. Futures for the Nasdaq 100 index rose 3.75 points, or 0.1%, to 4,491.75.
        Markets came under pressure Tuesday morning as crude oil prices headed for their worst settlement price since mid-April. The declines came after six world powers reached a deal with Iran that sees the country accept limits on its nuclear activities in exchange for the removal of economic sanctions.
        "An Iran deal means it can export from its stockpile of oil into the already saturated market and is likely to increase production another 5,000 barrels a day," said Rocky Muddar, trader at TradeNext, in a note. "But this is likely to take up 12 months while Iran reopens oil fields."
        Small-business sentiment dropped sharply in June, mostly on concerns over earning trends, according to an index released Tuesday. The National Federation of Independent Business small-business optimism index fell 4.2 points to 94.1. "While it is not a disaster or a signal of a looming recession, it is a disappointing sign that economic growth on Main Street is not set for a strong second half of growth. The weakness was substantial across the board, showing no signs of a growth spurt in the near future," said NFIB Chief Economist Bill Dunkelberg in a statement.
        Oil prices slid after Iran agreed a nuclear accord with Western powers that is likely to see yet more crude pumped into a global market that is already heavily oversupplied.
        Western powers and Iran on Tuesday signed a "road map" agreement that would limit Iran's path to a nuclear weapon in exchange for removing economic sanctions on Tehran. That could allow Iran to restart oil exports to the U.S. and the European Union.
        "Although it may take a certain amount of time to become fully equipped with an ability to produce oil at its optimum level, Iran does have a significant amount of oil reserves which is ready to hit the market," said Naeem Aslam, chief market analyst at Avatrade.
        Brent crude, the global oil benchmark, fell 1.5% to $57.30 a barrel on London's ICE Futures exchange. WTI crude futures for August delivery were trading down 1.7% at $51.10 a barrel on the New York Mercantile Exchange.
        Gold lost 0.2% to $1,153 per troy ounce.
        Iran Nuclear Deal Reached
        Iran reached a landmark nuclear agreement with the U.S. and five other world powers, a long-sought foreign policy goal of the Obama administration that sets the White House on course for months of political strife.
        U.S. Finds 'No Single Cause' of Treasurys Tremor
        U.S. officials concluded there was "no single cause" of the unprecedented volatility that hit U.S. Treasury markets Oct. 15, 2014 instead citing broad changes in the structure of Treasury markets, including the growing role of high-speed trading.
        Factory Output Across Eurozone Fell in May
        Factory output across the eurozone fell in May and last rose in February, an indication that its economic recovery remained weak as Greece and its creditors struggled to find ways to keep the heavily indebted country inside the currency area.
        Greece Fails to Make Another IMF Payment
        Greece defaulted on another payment due to the IMF, pushing the country's arrears up to ˆ2 billion as the country tries to secure an emergency financing deal.
        Greece Repays $95 Million Worth of Samurai Bonds
        Athens repays 20-year-old samurai bonds due the same day, a payment that had attracted attention from jittery investors.
        German Economic Sentiment Hits 8-Month Low
        German economic sentiment deteriorated further in July, despite the prospect of fresh bailout loans for Greece, a sign that the economic upswing in Europe's largest economy is losing some momentum.
        Write to Paul Larkins paul.larkins@wsj.com
        (END) Dow Jones Newswires

        July 14, 2015 06:21 ET (10:21 GMT)

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