Dollar hits near multi-month highs as Fed focuses on meeting


An employee counts US dollar banknotes at a currency exchange office in central Cairo, Egypt, March 20, 2019. REUTERS / Mohamed Abd El Ghany

TOKYO, July 26 (Reuters) – The US dollar approached its highest level since early April against the euro on Monday, as financial markets eagerly awaited the Federal Open Market Committee (FOMC) meeting this week for clues about the timing of the stimulus cut. .

The greenback was also close to a 12-day safe-haven yen high as US equity markets boosted risk sentiment.

The dollar index, which measures the currency against six major peers, stood at 92.920 at the start of the week, from 93.194, last week’s 3.5-month high. It was still up about 3.8% from a recent low on May 25, as the improvement in the US economy bolstered the Federal Reserve’s prospects of starting to cut asset purchases as soon as this. year.

The Commonwealth Bank of Australia predicts the dollar may continue to strengthen this week due to the possibility that the Fed will move closer to the cut after its two-day policy meeting on Wednesday.

“We expect the FOMC to drop ‘substantial’ from ‘substantial progress'” in its guidance on necessary labor market conditions before removing monetary support, wrote CBA strategist Joseph Capurso in a statement. customer note.

“Removing ‘substantial’ will signal that the FOMC believes it will soon be appropriate to reduce asset purchases,” putting in place a possible announcement of a cut in September, he said.

The risk to such an outlook is the increase in COVID-19 cases in the United States, after the Fed at its last meeting on June 16 dropped a reference to the coronavirus as a drag on the economy. Read more

The dollar index gained 0.2% last week, taking advantage of a safe haven supply over fears that an increase in infections of the fast-spreading Delta variant could derail the global recovery, but these gains were squeezed as strong US earnings lifted stocks.

The dollar last traded roughly Friday at $ 1.17655 per euro, near last week’s high of $ 1.1752, a level not seen since April 5.

It bought 110.56 yen, approaching Friday’s high of 110.58, which was the highest since July 14.

Elsewhere, the Australian dollar fell 0.1% to $ 0.7356, after falling to an almost eight-month low at $ 0.72895 last week as half of the country’s population languished under lockdown of COVID-19.

The British pound changed hands at $ 1.3745, little change from last week, when it rebounded to $ 1.3787 from a nearly six-month low at $ 1.35725 reached two days earlier.

In cryptocurrencies, bitcoin extended its gains by nearly $ 29,000 last week to push back over $ 36,000 on Monday for the first time since June. It last traded about 1.6% higher at $ 35,959.48.

The smaller rival Ether was last up 2.6% to $ 2,250.58, recovering from as low as $ 1,717.17 last week.

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Price of currency offers at 0056 GMT

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Reporting by Kevin Buckland Editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.


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