The dollar rises from a one-month low on the prospect of rising interest rates

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  • Dollar bounces against euro ahead of ECB meeting
  • Central bank meetings, data later in the week adds risk
  • Commodity-linked currencies rise further

NEW YORK / LONDON, Oct. 25 (Reuters) – The dollar fell from a one-month low on Monday, ahead of central bank meetings and economic data to come later this week, boosted by the prospect of a tightening of US monetary policy.

The upward movement came at the expense of the euro, Japanese yen and Swiss franc.

“There is so much risk of events this week and the dollar has underperformed over the past two weeks that the market is starting to buy back the dollar,” said Joseph Manimbo, senior market analyst at Western Union Business Solutions.

The dollar index rose nearly 0.2 to 93.8150 for the day after falling during trade in Asia to a one-month low following comments from the Federal Reserve Chairman on Friday, Jerome Powell, who has stated his intention to cut bond purchases.

At one point, the dollar index rose 0.4% on the day as the 10-year US Treasury yield rose. Then the dollar eased, as did the 10-year yield, which held around 1.63%.

“Generally speaking, the dollar is inspired by the 10-year, but there has been some decoupling on the idea that other central banks seem ready to raise their rates before the Fed,” Manimbo said.

Traders are awaiting economic growth data from the United States and central bank meetings in the euro area, Japan and Canada later this week that could change exchange rates.

The euro lost 0.3% to $ 1.1610. The European Central Bank meets on Thursday. While a big change is seen as unlikely, the bank’s comments could change one’s mind about the impact of inflationary pressures on interest rates.

“There is no way that they (ECB policymakers) cannot recognize that inflation has risen, but they also don’t want to be drawn into a waiting game given the accommodating leanings. of the ECB, “said Jeremy Thomson-Cook, chief economist. to the payment company Equals Money.

“In addition to the inflation and growth data expected this week, we will be able to better outperform the European economy relative to its UK and US counterparts, which should continue to allow further weakness of the euro at the future.”

The dollar posted gains against the Japanese yen, up 0.2% to 113.50 yen. The Bank of Japan will meet later this week, but like the ECB, it is not expected to deviate from its accommodative policy.

Thursday’s US gross domestic product figures – if they show an expected slowdown – could provide relief to the Fed even if inflation is relatively high.

Cryptocurrency with bitcoin rose 4% to $ 63,168, slightly below highs reached last week around $ 67,000.

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Price of currency offers at 10:00 a.m. (2:00 p.m. GMT)

Reporting by David Henry in New York and Tommy Wilkes in London. Editing by Peter Graff and Shinjini Ganguli

Our standards: Thomson Reuters Trust Principles.


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