Forex – Dollar Slips Ahead of Fed, Euro Pushes Higher

0
65

© Reuters.  Dollar slips ahead of Fed, euro pushes higher© Reuters. Dollar slips ahead of Fed, euro pushes higher

Investing.com – The dollar pulled back from Friday’s three-month highs against a basket of the other major currencies on Monday as investors turned their attention to a Federal Reserve decision later this week.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.16% to 94.58 by 08:44 AM ET (12:44 AM GMT), off Friday’s three month high of 95.06.

The dollar slid as investors took profits in the wake its largest weekly gain so far this year as they waited to see if recent strong economic data would prompt the Fed to adopt a more hawkish stance.

The Fed is to hold a two-day policy meeting on Tuesday and Wednesday at which it is expected to keep rates on hold.

Data on Friday showed that the U.S. economy grew at a 3% annual rate in the third quarter, better than forecasts for growth of 2.5%.

Meanwhile, a report on Monday showed that U.S. consumer spending rose by the most in over eight years in September, jumping 1.0%, but underlying inflation remained subdued.

The stronger-than-expected data underlined the case for the Fed to raise interest rates at a faster pace in the coming months. Higher rates tend to make the dollar more attractive to yield seeking investors.

Investors were also cautious ahead of a decision by President Donald Trump on his pick for the next Fed chair.

The dollar was fractionally lower against the yen, with USD/JPY dipping to 113.60, off Friday’s three-month high of 114.44.

The euro pushed higher, with EUR/USD rising 0.18% to 1.1630.

The gains came after the single currency posted its worst week since March last week, falling 1.48% against the greenback as a dovish European Central Bank and political unrest in Spain’s Catalonia weighed.

The euro found support on Monday as concerns over Catalonia eased after weekend polls indicated that Catalan secessionists may lose their majority in elections scheduled for December.

Meanwhile, sterling gained ground, with GBP/USD rising 0.44% to 1.3191 largely driven by expectations that the Bank of England will raise interest rates for the first time in almost a decade on Thursday.

sponsoredArticle = ‘div-gpt-ad-1466339494851-0’;