- Euro Soars Amid Trump Concerns; Oil Extends Gain
The dollar weakened for a fifth day and the euro surged to the highest since November after a report U.S. President Donald Trump revealed classified information to Russia’s top diplomat. Crude extended gains as confidence grew that output cuts will be extended.
The dollar fell against most of its major peers after the Washington Post reported the president last week shared closely-held intelligence with Russia’s foreign minister and ambassador. The greenback’s weakness translated to gains for precious metals, while crude rose a fifth day as Goldman Sachs Group Inc. said willingness by Saudi Arabia and Russia to extend production cuts will likely sway other countries.
The market reaction to the latest in a string of controversies to dog Trump highlights growing uncertainty that the president will be able to deliver on plans to boost infrastructure spending and cut taxes. That could prove key to investors, who are weighing historically pricey equities and ominously low volatility just as data from both China and the U.S. casts a shadow on global growth.
“This sort of discussion is very new indeed and has caused a lot of U.S. politicians to raise more concerns, and that has clearly rippled into the markets,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “We can still buy into the interest-rate differentials arguments for the dollar but the arguments about fiscal stimulus and cross-border flows look more tenuous and have made us neutralize our bets on the dollar.”
What investors will be watching:
- In the U.S., data on industrial production and housing starts are scheduled for Tuesday.
- The IEA comes out with estimates of April OPEC production the same day.
- OPEC’s internal Economic Commission Board meets in Vienna Wednesday to discuss the market in preparation for the group’s formal meeting on May 25.
- Wednesday’s U.K. labor report may reveal pay rose 2.1 percent, down from 2.2 percent.
- Singapore exports and Malaysia CPI for April are also due Wednesday, and the Australian jobs report a day later.
- Japanese GDP for the first quarter will be out on Thursday.