Haven gains ebb as traders await Fed, ECB minutes

Dubai - A shift to haven assets in the wake of North Korea’s missile test faded as investor attention turned to central banks and the impending release of minutes of the latest Fed meeting. Oil fell, ending an eight-day winning streak.

Gold and the Japanese yen gave up early gains, with both the metal and the currency retreating. The dollar rose as US stock futures and Treasuries traded sideways before the Federal Reserve release, due today.

The euro weakened and European stocks were little changed amid a slew of services data, and as investors await Thursday’s publication of the latest ECB minutes. Oil dropped as Russia was said to oppose moves to deepen OPEC cuts.

An emergency United Nations Security Council meeting on Wednesday will try to formulate a response to North Korea’s latest provocation, but markets are once again showing the capacity to quickly move beyond periods of tension on the Korean peninsula.

In the wake of last week’s unexpected turn toward tightening by a number of major policy makers, investors will scour the minutes for clues not only on the path for borrowing costs, but also for the fate of central bank balance sheets.

“The FOMC minutes will be the major macroeconomic highlight as the US returns from the Independence Day break,” Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note. “Lack of details regarding the Fed’s balance sheet policy could further weigh on US yields and the dollar.”

Beyond the Fed and ECB minutes, here’s what’s coming up:

A G-20 summit kicks off in Hamburg this week. US President Donald Trump is expected to hold his first meeting with Russia’s Vladimir Putin as well as meet his Chinese counterpart Xi Jinping.

American employers probably added around 175 000 workers in June and wage growth probably strengthened, consistent with a solid labour market, economists project the US Labour Department to report on Friday.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index was little changed at 12:17 after surging 1.1% on Monday. Futures on the S&P 500 Index were little changed. The underlying gauge rose 0.2% on Monday in a shortened session before the July 4 holiday.

Currencies

The Bloomberg Dollar Spot Index strengthened 0.3%.  The British pound slipped 0.1% to $1.2909.  The euro weakened 0.2% to $1.1319.

Commodities

Gold dropped 0.4% to $1 218.84 an ounce, erasing an earlier gain of 0.5%. WTI crude tumbled 1.5% to $46.36 a barrel.

Bonds

The yield on 10-year Treasuries was little changed at 2.35%. The market was closed on Tuesday. UK benchmark yields advanced three basis points to 1.27%. French and German yields were little changed.

Asia

Japanese and Hong Kong equities reversed early declines, ending higher as automakers and technology companies rose. The yen fell 0.3%, after erasing a 0.4% advance.

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