NEW YORK: The US dollar and euro on Monday were range-bound ahead of decisive meetings of both central banks this week and President Donald Trump’s summit with North Korean leader Kim Jong Un in Singapore on Tuesday.
The greenback was up 0.14 percent against a basket of six currencies during Monday’s session, despite heightened worries about a global trade war following a spat at the Group of Seven summit in Canada between Trump and other leaders over automobile tariffs and other issues.
The move was muted by uncertainty about the outcome of Trump’s meeting with North Korea. Trump said on Monday his historic summit with the North Korean leader could “work out very nicely” as officials from both countries sought to narrow differences on how to end a nuclear stand-off on the Korean peninsula.
In early trade the euro approached a near-two-week high of $1.1820 after assurances from Italy that it would not leave the European Union calmed investors’ nerves. But the euro ultimately settled around $1.1785 before the European Central Bank’s policy meeting on Thursday.
Italy’s Economy Minister Giovanni Tria said on Sunday his new coalition government would not leave the euro or issue securities to pay off companies owed money by the state, a plan investors viewed as a first step toward exiting the bloc.
“Today has mostly been ranges. The euro has been 1.1805, 1.1810, bouncing back and forth. I think a lot of that has to do with_ confirmation that we’re going to be getting some indication from the ECB about the ending of QE,” said John Doyle, vice president of dealing and trading at Tempus, Inc in Washington D.C., referring to quantitative easing.
Investors are raising their bets that the ECB will signal at a policy meeting later this week a tapering down of its 2.55 trillion euro bond-buying program as early as September, following a flurry of hawkish comments by officials last week.
Before the ECB meeting, the U.S. Federal Reserve is expected to raise interest rates for the second time this year on Wednesday. The market’s focus will be on the Fed’s projection on the path of future interest rates.
Futures markets implied traders expect the Fed to raise overnight borrowing at least one more time in 2018 after a possible rate increase on Wednesday, according to CME Group’s FedWatch program.
The dollar index was steady at 93.580, rising further from a three-week low set last Thursday.