US recap: EUR/USD squanders most gains as yields bolster dollar
July 1 (Reuters) -The dollar rose against most majors on Monday and pared its losses sharply versus the euro as Treasury yields extended a rise that has accelerated since last week's U.S. presidential debate.
The dollar's recovery powered through an ISM manufacturing report that showed unexpectedly weak PMI and a chunky drop in prices paid, though new orders showed improvement.
Since President Joe Biden's poor showing in last week's debate, markets have been forced to consider the policy mix -- including trade and fiscal -- that could result from a potential victory by Donald Trump.
The market's initial take appears to be that higher yields are in order, though it's still early days in the campaign season and the post-election political balance is far from decided.
There's plenty of non-political information for investors to scrutinize this week, including JOLTS on Tuesday; ADP, jobless claims and ISM services on Wednesday; and non-farm payrolls on Friday.
In New York afternoon trade, the S&P 500 was 0.12% higher, sticking to a tight range as the market looked ahead to the payrolls report to inform views of Fed rate-cut expectations.
U.S. Treasury yields were 5-14bp higher on the day, with the 2s-10s curve steepening more than 6bp to a less inverted -29.3bp.
WTI rallied 2.31% on hopes of rising demand during the Northern Hemisphere's peak summer driving season and worries that OPEC+ production cuts could result in supply deficits later in the year.
Copper firmed 0.33%, helped by some stronger data from China's manufacturing sector, but worries about demand in the top consumer fueled by climbing inventories capped gains.
Gold edged 0.18% higher, buoyed by some short covering from investors but focused on the looming U.S. jobs data as a new input for refining Fed policy expectations.
Heading toward the close: EUR/USD +0.15%, USD/JPY +0.37%, GBP/USD -0.05%, AUD/USD -0.28%,
For more click on FXBUZ
(Burton Frierson)
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