CURRENCIES: Dollar Weakness Moderates As Traders Turn Attention To Fed Meeting
September 24 2018 - 3:43PM
Dow Jones News
By Anneken Tappe
A slide in the U.S. dollar and a rally by its main rival, the
euro, moderated toward the end of the New York trading session on
Monday, and investors returned to focusing on this week's Federal
Reserve meeting, which is widely expected to deliver a rate
increase.
Earlier in the session, European Central Bank President Mario
Draghi said in introductory remarks
(http://www.marketwatch.com/story/ecb-president-mario-draghi-expects-vigorous-pick-up-in-underlying-inflation-2018-09-24)
at a hearing on economic and monetary matters in the European
Parliament that he expected a "vigorous pick-up in underlying
inflation," even though harmonized eurozone headline inflation was
likely going to ba flat until 2020.
In response, the euro jumped to a session high of $1.1816, its
best level since mid-May. The shared eurozone currency then receded
and last changed hands at $1.1759, compared with $1.1749 late
Friday in New York. The euro's advance pushed the U.S. dollar lower
as U.S. market participants assessed the latest developments in the
trade battle between the U.S. and China, as well as the Federal
Reserve's Wednesday rate decision, at which the central bank is
expected to raise interest rates by 25 basis points. Fed-funds
futures show traders have priced in a 92% chance of a rate
increase.
Read:With its last easy decision, Fed will try to avoid adding
fuel to the fire
(http://www.marketwatch.com/story/with-its-last-easy-decision-fed-will-try-to-avoid-adding-fuel-to-the-fire-2018-09-21)
The ICE U.S. Dollar Index added on to last week's 0.7% loss--its
worst in a month
(http://www.marketwatch.com/story/dollar-bounces-higher-but-poised-for-worst-week-in-a-month-2018-09-21)--and
was last little change din negative territory at 94.188.
China called the U.S. a trade bully and pulled out of the next
round of talks
(http://www.marketwatch.com/story/china-accuses-us-of-trade-bullyism-as-200-billion-in-tariffs-kick-in-2018-09-24).
The latest round of U.S.-imposed import tariffs on Chinese goods
are due to come into effect Monday, prompting retaliation by
Beijing.
The Australian dollar weakened against its U.S. counterpart, and
the pair, which market participants referred to as the
"quintessential risk-off pair", was among the worst performers in
developed markets. One Aussie dollar last bought $0.7257, versus
$0.7289 late Friday in New York.
The greenback bought 6.8790 yuan onshore in Beijing, up 0.3%,
and 6.8670 yuan in the offshore market, up 0.3%.
"Perhaps most surprising of all was the rebound in cable which
crossed above the $1.31 mark in London dealing and has not looked
back," said Boris Schlossberg, managing director of FX strategy at
BK Asset Management about the British pound .
Sterling last bought $1.3118, compared with $1.3080 late Friday
in New York.
"This is despite no seeming progress on Brexit negotiations and
slightly disappointing [factory orders] data," Schlossberg
said.
Last week, the European Union rejected U.K. Prime Minister
Theresa May's post-Brexit proposal
(http://www.marketwatch.com/story/uk-leader-theresa-may-under-pressure-after-eu-leaders-rebuff-her-brexit-plan-2018-09-21),
prompting May, who is facing her party's conference this week, to
say that the U.K. would prepare for the possibility of a "no deal"
Brexit in March 2019. The next Brexit summit is scheduled for
November.
(END) Dow Jones Newswires
September 24, 2018 15:28 ET (19:28 GMT)
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