Euro stronger ahead of ECB meeting; dollar index slips

FAN Editor
FILE PHOTO: Sheets of Lincoln five dollar bill are inspected with magnifying glass at Bureau of Engraving and Printing in Washington
FILE PHOTO: Sheets of former U.S. President Abraham Lincoln on the five-dollar bill currency are inspected through a magnifying glass at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron/File Photo

January 22, 2018

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The euro edged higher against the U.S. dollar on Monday, as market participants awaited the outcome of the European Central Bank’s meeting on Thursday for possible clues to future shifts in the bank’s monetary policy.

The dollar index <DXY>, which measures the greenback against six rival currencies, was down 0.16 percent at 90.428, close to a three-year low, as the U.S. government shutdown weighed on sentiment.

Investors were also focused on a Bank of Japan policy announcement on Tuesday.

“Generally speaking the majors are all holding in familiar territory here ahead of a busy week of economic news and data, particularly on the central bank front,” said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.

Analysts do not expect Japan to signal any policy shift.

The ECB is likewise unlikely to ditch a pledge to keep buying bonds at next week’s meeting as rate setters need more time to assess the outlook for the economy and the euro, three sources close to the matter have said.

“If we get kind of status quo statements from both central banks, which is very likely, that could provide a little bit of a boost for the dollar,” said Esiner.

The idea of other major central banks moving closer to more normal policies has been a key headwind for the dollar over the last year.

The greenback had a slightly weaker tone on the day but did not concede too much ground against most major currencies as a government shutdown in Washington largely failed to worry the market.

The U.S. government shutdown took effect at midnight on Friday after Democrats and Republicans failed to agree on a last-minute deal to fund government operations.

The Senate scheduled a vote on a stopgap spending measure for noon on Monday.

“The markets are taking all of this in relative stride, for now,” said Greg Peters, senior portfolio manager at PGIM Fixed Income.

“That said, the longer this shutdown persists, the markets will increasingly be concerned,” he said.

Sterling was up 0.82 percent against the greenback at $1.3963, after earlier rising as high as $1.397, its highest since June 2016.

Traders pushed the British pound higher after five consecutive weeks of gains against the dollar, the currency’s longest winning streak since 2014.

“This is a continuation of the move we saw for the last couple of weeks. I think the move is looking increasingly overdone.” said Esiner.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Jennifer Ablan; Editing by Meredith Mazzilli)

Free America Network Articles

Leave a Reply

Next Post

IMF raises global growth forecast, sees Trump tax boost

FILE PHOTO: International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the IMF/World Bank annual meetings in Washington, U.S., October 14, 2017. REUTERS/Yuri Gripas January 22, 2018 By Noah Barkin and Dmitry Zhdannikov DAVOS, Switzerland (Reuters) – The International Monetary Fund on Monday revised up its […]