© Reuters. FILE PHOTO: A woman counts a Japanese 10,000 yen banknote in Tokyo, in an illustrative photo on February 28, 2013. Photograph: Shuhei Miyano/Reuters
Written by Laura Matthews
NEW YORK (Reuters) – The dollar clung to gains against the euro on Monday after recent economic data showed a strengthening U.S. economy and a slowdown in the euro zone, with traders looking beyond this week’s three central bank meetings for clues to the outlook for monetary policy.
A closely watched survey of purchasing managers showed that business activity in the United States slowed to a five-month low in July, dragged down by slowing services sector growth, but the data was better than similar surveys outside Europe. Falling US input prices and slowing hiring suggest that the Federal Reserve may be making progress on important fronts in its attempt to bring down inflation.
“When you scan the global picture, there are more reasons for optimism about the United States than almost anywhere else, and that translates to the dollar,” said Adam Patton, senior currency analyst at ForexLive in Toronto. “The American economy is really the best of the humble bunch.”
The euro fell 0.49% to $1.1069 while the pound was last trading at $1.2823, down 0.25% on the day, kicking off a busy week with central bank meetings with investors anticipating rate hikes in Europe and the US.
It rose 0.247% to 101.330, while futures expect the Fed’s overnight rate to rise to 5.43% in November and stay above 5% through June 2024..
The Japanese yen rose 0.24% against the dollar, to 141.47 per dollar.
The Federal Reserve wraps up its meeting on Wednesday, followed by the European Central Bank (ECB) the next day and the Bank of Japan (BOJ) on Friday, as well as earnings from several heavyweights.
Investors are expecting both the European Central Bank and the Federal Reserve to raise interest rates by 25 basis points, and in either case focus on the signals they are sending about the September meetings. Inflation easing may allow the Fed room to hint at a pause.
“The Fed probably won’t raise interest rates again at its September meeting after this week’s hike, but with the US economy improving for the time being, the euro is taking the brunt of broad dollar strength,” said John Phillis, head of Americas macro strategy at BNY Mellon (NYSE:: Markets) in New York.
Traders say the BoJ is the most likely of the three central banks to cause a market-moving surprise, with yield curve control adjustment as a possibility.
The Japanese currency fell last Friday to 141.92 against the dollar, and it also fell at the intersections, after a Reuters report stating that the Bank of Japan tended towards maintaining the yield curve control policy unchanged, despite the high volatility measures as the meeting approached.
“There is a deep sense of unease about what might come next from the BoJ,” said ForexLive’s Button.
In the cryptocurrency, the bitcoin price recently declined by 2.72% to $29,069.21. It fell last 2.45% to $1,848.12.
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Coin bid prices at 2:41 PM (1841 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
dollar index
101.3300 101.0900 +0.25% -2.087% +101.4100 +100.8800
euro/dollar
1.1071 USD 1.1124 -0.47% + 3.33% + 1.1147 USD + 1.1065 USD
dollar / yen
141.4700 141.8500 -0.26% + 7.91% + 141.8050 +140.7500
euro / yen
156.63 157.76 -0.72% +11.64% +157.7800 +156.2500
dollars / Swiss
0.8683 0.8660 +0.26% -6.11% +0.8688 +0.8640
British pound / dollar
1.2825 USD 1.2852 -0.21% + 6.05% + 1.2883 USD + 1.2799 USD
Canadian Dollar
1.3166 1.3224 -0.44% -2.83% +1.3229 +1.3152
Australian dollar / dollar
$0.6742 0.6732 +0.19% -1.06% + $0.6756 + $0.6715
Euro / Swiss
0.9611 0.9629 -0.19% -2.87% +0.9646 +0.9589
Euro / British Pound
0.8630 0.8652 -0.25% -2.42% +0.8659 +0.8620
NZ
USD/USD 0.6198 USD 0.6166 +0.63% -2.28% + 0.6215 USD + 0.6158 USD
dollar / Norway
10.0600 10.0650 + 0.06% + 2.62% +10.1120 +10.0600
Euro / Norway
11.1425 11.1944 -0.46% + 6.18% +11.2370 +11.1256
Dollar / Sweden
10.4186 10.3865 -0.12% + 0.10% +10.4341 +10.3668
EUR / Sweden
11.5300 11.5437 -0.12% + 3.41% +11.5946 +11.5110