NEW YORK: The dollar rose on Monday against a basket of currencies as U.S. bond yields climbed and traders waited for a Federal Reserve meeting and a U.S. jobs report later in the week, while the euro and pound were both down.
Against a basket of currencies, the dollar index rose 0.28 percent to 89.319 as of 3:41 p.m. ET (2041 GMT).
After six straight weekly declines, the greenback was on track to fall 3 percent for the month.
On Monday the euro slid to $1.2335, its session low, before paring losses later in the day. It last fell 0.27 percent to $1.2386. The British pound last decreased 0.67 percent.
“At the end of the day, we’ve got a fairly eventful week, and it’s a slow start to an eventful week where consolidation is a primary driver for FX flows,” said Kathy Lien, managing director for BK Asset Management in New York.
Traders are feeling some uncertainty going into this week’s Fed meeting, said Douglas Borthwick, managing director and head of FX at Chapdelaine Foreign Exchange in New York.
“Depending on the new Fed leadership, which is being run now by (Jerome) Powell, the market is concerned about whether we’re going to see continued rate rises at the current velocity that’s expected or whether it’s going to be increased somewhat,” he said.
Reuters data points to market expectations of about three more Fed rate hikes this year, starting in March, although some analysts, including at Goldman Sachs and JP Morgan Asset Management, expect the Fed to raise rates four times.
Traders also awaited a U.S. Department of Labor report to be released on Friday, that will include data on nonfarm payrolls, average hourly earnings and the unemployment rate. BK’s Lien said she expects wage growth could slow.
On Monday a Commerce Department report said U.S. consumer spending rose solidly in December, but savings dropped to a 10-year low. The dollar increased marginally after the report.
Data on Friday showed U.S economic growth accelerated to 2.3 percent in 2017, faster than the 1.5 percent logged in 2016, although growth in the December quarter slowed on a sequential basis and was below market expectations.
U.S. Treasury yields surged to more than three-year highs on Monday after comments from a European Central Bank official added to expectations that central banks globally will reduce stimulus as the economic outlook improves. The 10-year yield rose to 2.6955 percent, its highest since early 2014.
Source: Brecorder.com
