Dollar Hovers Around 15-Month Low as Traders Await Policy Decisions
The dollar edged lower on Monday against a basket of currencies after suffering its biggest weekly drop of the year as traders waited on economic data and policy decisions before selling it down any further.
The euro continued climbing, rising 0.15% to hit a fresh 16-month high at $1.12440. Versus the yen the dollar fell 0.27% to 138.38 yen per dollar, after touching on Friday its lowest against the Japanese currency in two months.
“Last week’s U.S. disinflation shock altered the FX landscape, but a few days without key data releases will tell us whether that impulse can keep the dollar on the back foot as the FOMC risk event draws nearer,” said Francesco Pesole, FX strategist at ING.
“Euro/dollar appears a bit overstretched in the short term and could face a correction this week,” he added.
Last week’s U.S. inflation data fuelled investors’ bets that the Federal Reserve was close to the end of its rate hike cycle, and the dollar index had its biggest weekly decline since November 2022, falling 2.25% on the week…
Hikes are expected from the Fed and European Central Bank next week, but beyond that market pricing implies the Fed will likely stop, before cuts next year, while in Europe another hike probably beckons.
CHINESE DATA
Elsewhere, Chinese growth data landed a little above low expectations on Monday, but without sparking much currency market response as traders had already priced in a sluggish quarter and are waiting to see if the government steps up stimulus to promote spending…
Sharp gains in the yen have slowed as traders weigh whether the ultra-dovish Bank of Japan is really likely to make any shifts at its policy meeting next week, given rhetoric suggests they are in no hurry.
The Swedish and Norwegian crowns continued to climb after making gains of more than 5% on the dollar last week.
The Swedish crown rose 0.65% to 10.1860 against the dollar, the Norwegian crown rose instead 0.4% to 10.0180.
At $1.3094 sterling was parked just below last week’s 15-month peak.
Source: Reuters
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