Dollar near 3-month low, weighed down by Fed outlook
TOKYO (Reuters) – The dollar stayed close to its three-month low amid the euro’s resurgence, struggling for traction as investors cut previous bets, the US Federal Reserve may soon be ready to cut its stimulus measures.
The dollar index, measuring the greenback against a basket of six currencies, was hovering at 90.027, a little above the three-month low of 89.646 set on Friday.
The minutes of the Fed’s April policy meeting released last week showed that a significant minority of policymakers wanted to discuss phasing out bond buying.
Yet repeated warnings from Fed Chairman Jerome Powell that it is not yet time to discuss reducing quantitative easing has led many investors to believe it will be months before. that the central bank does not really change its policy.
“The inflation numbers have been pretty strong, but retail sales may be starting to slow. And the economic outlook depends on fiscal policy, which is still uncertain, ”said Shinichiro Kadota, senior currency strategist at Barclays.
The White House said on Friday it had cut its infrastructure bill to $ 1.7 trillion from $ 2.25 trillion, with cuts to investment in broadband, roads and bridges, but Republicans rejected the changes as insufficient for a deal.
Data from the United States Commodity Futures Trading Commission released on Friday night showed speculators slightly increased their net short positions in the dollar over the past week while increasing their long positions in the euro for four consecutive weeks. .
The euro traded at $ 1.2179, after a three-month high of $ 1.2245 hit on Wednesday.
Some analysts said the currency was capped by comments from European Central Bank President Christine Lagarde on Friday that it was still too early for the bank to discuss winding up its purchase program. emergency bonds of 1.85 trillion euros.
Still, the euro and other European currencies have been bolstered by growing optimism about economic reopenings in the region following coronavirus lockdowns.
A preliminary purchasing managers’ index covering the dominant services industry in the 19-country eurozone, released on Friday, rebounded to 55.1 from 50.5 in April, well above expectations and its highest since June 2018.
The British pound rose to $ 1.4144, following Friday’s three-month high of $ 1.4233.
The yen was little moved at 108.92 per dollar.
In the volatile cryptocurrency market, bitcoin fell more than 7% over the weekend to last trade at $ 34,157, after falling to $ 31,107 at some point on Sunday.
Ether fell to a two-month low of $ 1,730 on Sunday, down 60% from a record high just 12 days ago, and last traded at $ 2,052.
Cryptocurrencies fell after Elon Musk’s Tesla said he would stop accepting bitcoin and after China tightened its crackdown.
Reporting by Hideyuki Sano; Editing by Sam Holmes