US dollar flat as market awaits clarity from central banks
Reuters
Published Jul 24, 2023 09:41PM ET
Updated Jul 25, 2023 03:45PM ET
By Laura Matthews
NEW YORK (Reuters) - The dollar was flat against a basket of its major peers on Tuesday, as investors hope a trio of central bank meetings this week will provide guidance on the outlook for monetary policy.
Signs of an extremely resilient U.S. economy helped the currency recover from a recent 15-month low, as well as persistent weakness in Europe.
U.S. consumer confidence increased to a two-year high in July amid a persistently tight labor market and receding inflation, bolstering the economy's prospects in the near term.
Still, the economy is not out of the woods, with the survey from the Conference Board on Tuesday offering mixed signals. Consumers remain fearful of a recession over the next year following hefty interest-rate hikes from the U.S. Federal Reserve.
"There was a lot of anticipation that we were going to get consolidation leading up to the Fed, and for the most part, risk appetite has been hanging in there. What we're probably going to see is the forex market is really going to have to have a wait and see approach," said Edward Moya, senior market analyst at Oanda in New York.
"We might have an initial move post Fed, but we then have to really pay close attention to not just ECB but also the BOJ. So, I think FX volatility should still remain elevated, and that's why we're not seeing a lot of positioning on the day like today."
The dollar index fell 0.108% to 101.280, after hitting a two-week peak earlier of 101.65.
The euro fell for a fifth successive session, and was down 0.13% to $1.1048 as evidence of a slowdown in Europe builds after a recent survey showed demand for loans in the euro zone hitting a record low in the second quarter, and separate data showed deterioration of business confidence in Germany this month. This follows disappointing Purchasing Manager Indexes on Monday that came in below expectations for the euro zone as a whole.
Markets have plenty more to watch as the Fed concludes a rate-setting meeting on Wednesday, followed by the European Central Bank (ECB) a day later and the Bank of Japan on Friday, as well as earnings from heavyweight companies. Both Google-owner Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are due on Tuesday.
"In the last week or so, there have been wobbles on market views about both the outcomes for the Fed and the ECB in September and investors will be looking for some clarity from policymakers this week – though it cannot be assumed that this will be provided," said Jane Foley, head of FX strategy at Rabobank London.
The Japanese yen strengthened 0.38% versus the greenback at 140.92 per dollar, while sterling was last trading at $1.2896, up 0.50% .
In cryptocurrencies, bitcoin last rose 0.42% to $29,261.22.
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Currency bid prices at 3:16PM (1916 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index
101.2800 101.4100 -0.11% -2.135% +101.6500 +101.1800
Euro/Dollar
$1.1049 $1.1062 -0.11% +3.13% +$1.1087 +$1.1036
Dollar/Yen
140.9150 141.5050 -0.40% +7.50% +141.6200 +140.8600
Euro/Yen
155.70 156.51 -0.52% +10.98% +156.8800 +155.6300
Dollar/Swiss
0.8644 0.8695 -0.53% -6.46% +0.8700 +0.8638
Sterling/Dollar
$1.2897 $1.2825 +0.57% +6.65% +$1.2899 +$1.2810
Dollar/Canadian
1.3170 1.3168 +0.02% -2.80% +1.3209 +1.3147
Aussie/Dollar
$0.6791 $0.6740 +0.77% -0.37% +$0.6793 +$0.6727
Euro/Swiss
0.9549 0.9622 -0.76% -3.50% +0.9631 +0.9547
Euro/Sterling
0.8566 0.8624 -0.67% -3.14% +0.8637 +0.8565
NZ
Dollar/Dollar $0.6228 $0.6204 +0.37% -1.93% +$0.6230 +$0.6191
Dollar/Norway
10.0550 10.0620 +0.07% +2.60% +10.1540 +10.0200
Euro/Norway
11.1134 11.1149 -0.01% +5.86% +11.2038 +11.0974
Dollar/Sweden
10.3737 10.4077 -0.42% -0.33% +10.4508 +10.3500
Euro/Sweden
11.4634 11.5117 -0.42% +2.81% +11.5265 +11.4594
(Reporting Laura Matthews in New York; Additional reporting by Rae Wee in Singapore and Alun John in London; Editing by Jonathan Oatis and Marguerita Choy)
Written By: Reuters
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