Home Forex News Dollar drifts lower; consolidating ahead of Fed minutes

Dollar drifts lower; consolidating ahead of Fed minutes


Dollar drifts lower; consolidating ahead of Fed minutes By Investing.com

Breaking News


AuthorPeter NurseCurrencies

Published Feb 19, 2024 03:54AM ET
Updated Feb 19, 2024 04:01AM ET

© Reuters.

Investing.com – The U.S. dollar edged lower in early European trade Monday, handing back some of its recent gains in holiday-affected trade ahead of the release of the latest Fed minutes for clues of the outlook for U.S. interest rates.

At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 104.067, remaining close to three-month highs. 

Dollar consolidates after recent gains

The Presidents’ Day holiday in the U.S. has limited activity in the foreign exchange markets Monday, and traders have used the opportunity to back some recent dollar gains.

The greenback registered gains last week, its fifth successive positive week, after data showed both U.S. producer prices and consumer prices increased more than expected in January, raising the prospects of the Federal Reserve pushing back the start of its rate-cutting cycle to the start of summer compared with March at the beginning of the year.

The main focus this week will be on the minutes of the Fed meeting from last month, scheduled for Wednesday, while several Fed officials, including Christopher Waller and Raphael Bostic, are also due to speak this week.

Euro edges higher; ECB wage data in focus

In Europe, EUR/USD traded 0.1% higher at 1.0783, trading in a tight range as traders await Tuesday’s ECB survey of negotiated wage rates, and then the release of the flash PMIs for February on Thursday.

The ECB’s wage data will be of importance given how much policymakers have warned about high wage growth, even though it is a well known lagging indicator.

“The issue will be how much, if at all, negotiated wages slowed from the prior survey of around 4.7% year-on-year,” said analysts at ING, in a note. “Here, a high figure could raise expectations that the broader wage release in late April will also come in on the high side and finally wipe out the chances (now priced at 36%) that the ECB will cut rates in April.”

GBP/USD traded 0.2% higher at 1.2622, with sterling helped by the slight dollar weakness as well as the spillover from Friday’s data showing U.K. retail sales grew at their fastest pace in nearly three years in January.

Yen remains close to key level

In Asia, USD/JPY fell 0.2% to 149.94, flitting around the physiologically-important 150 level as traders remained wary of any potential government action in currency markets. 

The yen had tumbled to three-month lows over the past week amid growing conviction that the Bank of Japan will be slow in tightening its ultra-loose monetary policy. Pressure from the prospect of higher-for-longer U.S. interest rates also weighed. 

USD/CNY edged 0.1% higher to 7.1986, remaining in sight of a three-month low, although further losses were limited by a strong daily midpoint fix from the People’s Bank of China. 

The central bank is also widely expected to keep its benchmark loan prime rate unchanged on Tuesday, leaving the rate at record lows. 

Dollar drifts lower; consolidating ahead of Fed minutes

Related Articles

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News