The dollar index has returned to growth

The dollar pulled back from an 8-month low on Monday ahead of this week’s central bank meetings, although its gains were limited by a dovish reassessment of expectations of a rate hike by the U.S. Federal Reserve versus more hawkish banks, Reuters writes.

The U.S. dollar index rose 0.03% to 101.92 after hitting an eight-month low of 101.50 last week.

The dollar, meanwhile, is on track for a fourth consecutive monthly loss of more than 1.5%, pressured by expectations that the Federal Reserve is ready to pause its rate hike cycle and that the rate will not rise further as high as previously feared.

The pound rose 0.04% to $1.2405 and the euro rose 0.06% to $1.0874.

But their gains were tempered ahead of policy meetings between the Federal Reserve and the European Central Bank and the Bank of England later this week.

According to Rodrigo Catril, currency strategist at National Australia Bank (OTC:NABZY) (NAB), while the market is trying to gauge how the central banks will behave.”

The Fed is expected to raise rates by 25 basis points, down from last year’s 50 basis point and 75 basis point hikes, while the Bank of England and the ECB are likely to raise rates by 50 basis points each.

The euro, which is close to a monthly gain of nearly 1.5%, has received support from the ECB’s continued hawkish rhetoric and easing fears of a deep recession in the eurozone.

The New Zealand dollar fell 0.05% to $0.6491 and the yen jumped nearly 0.2% to $129.62 per $1.


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