USD: Hawkish Fed can lift the dollar The dollar enters FOMC day after having shown some resilience over the past few sessions, which was likely the consequence of some defensive positioning ahead of key central bank meetings, which kept risk assets capped. Still, the last important piece of data before the Federal Reserve announcement – yesterday’s Employment Cost Index – offered more reasons to think the Fed is indeed close to the peak. Labour costs eased for a fourth consecutive quarter in 4Q, moving from 1.2% to 1.0%, the same ...

The dollar edged lower against the euro on Wednesday ahead of an eagerly-awaited Federal Reserve policy decision with investors hoping the U.S. central bank will signal the end of its interest rate hiking cycle. After a series of jumbo rate hikes in 2022 to tame inflation, the market expects a quarter-of-a-percentage-point increase in the Fed benchmark interest rate to 4.75%. It would be the smallest increase since the central bank kicked off its tightening cycle 10 months ago with one the same size. Less clear is whether the central bank ...

Egypt’s net foreign assets (NFAs) improved by 47.28 billion Egyptian pounds in December, marking a second month of increases after it allowed its currency to depreciate sharply in October, central bank data showed. NFAs improved to a negative 494.3 billion Egyptian pounds from a negative 541.5 billion in November. This works out to an improvement of about $2.06 billion using end-of-month central bank exchange rates, according to Reuters calculations. Before the October depreciation, the central bank had been relying on NFAs, which represent banking system assets owed by non-residents minus ...

USD: Some support going into the Fed meeting European data and global risk sentiment drove G10 FX dynamics yesterday. A weak start to the week for risk assets kept the dollar supported, especially during the US session, and signalled some market cautiousness ahead of multiple risk events: the FOMC tomorrow, ECB and Bank of England on Thursday, and US payrolls on Friday. Today, the last few pieces of US data before the Fed decision will be watched quite closely. Particular interest will be on the Employment Cost Index (ECI), which ...

The dollar ticked higher on Tuesday ahead of a raft of central bank decisions but remained on track for its fourth consecutive monthly loss. The Federal Reserve will set interest rates on Wednesday, followed by the European Central Bank (ECB) and Bank of England (BoE) on Thursday. Currencies struggled for direction overnight, with the euro slipping against the dollar in early trade in Europe and was last down 0.41% at $1.081. It was “likely some profit-taking ahead of the key event risks just ahead,” said Alvin Tan, head of Asia ...

Brazil’s Finance Minister Fernando Haddad said on Monday the newly inaugurated government would move forward with measures to expand the availability of credit despite the country’s high benchmark interest rate, which he again criticized. Speaking at an event hosted by Fiesp, Brazil’s biggest industry association, he cited eight proposed bills already in Congress that are “ready to be forwarded,” including one that modernizes guarantees for bank credit and should be voted on shortly in the Senate. After meeting with central bank governor Roberto Campos Neto this morning, Haddad said he ...

USD: Action kicks off tomorrow The dollar starts the weak in very narrow ranges and not far from the lows of the year. This week will stress test the consensus view amongst investors that i) the Federal Reserve will start to acknowledge easing price pressures and soon end its tightening cycle, ii) China reopening will support global growth and iii) that lower energy prices mean improved European growth prospects. Our macroeconomists discuss many of those themes in their week ahead preview, including links to full previews for this week’s FOMC, ...

The dollar languished near an eight-month low on Monday ahead of a slew of central bank meetings this week, while higher Spanish inflation data supported the euro ahead of euro area readings on Wednesday. The U.S. dollar index, which measures the currency against a basket of its peers including the euro, was flat at 101.88, having hit an eight-month low of 101.50 last week. It was down more than 1.5% in January and on track for a fourth consecutive monthly loss, pressured by expectations that the Fed is nearing the ...

The dollar clung to modest gains against the euro on Friday after data showed falling U.S. consumer spending and cooling inflation, and as investors awaited a slew of central bank meetings next week. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, dropped 0.2% last month, the Commerce Department said on Friday. Data for November was revised lower to show spending slipping 0.1% instead of gaining 0.1% as previously reported. Economists polled by Reuters had forecast consumer spending dipping 0.1%. The Commerce Department reported the Federal Reserve’s ...

USD: Gearing up for an upside correction? The year started quite poorly for the US growth story, but the past couple of weeks have – at least – not given reasons to be even more pessimistic. Yesterday, growth figures in the US were slightly above consensus, and durable goods orders came in strong. We recommend reading our US economist’s note on those releases though, as a deeper look tells a different story than what the headline figures suggest. The week ends with December data on personal income and spending, as ...

Bullish bets on the Singapore dollar and the Malaysian ringgit further consolidated to scale five-year highs as a fizzling U.S. dollar rally and China’s pivot from its strict COVID-19 curbs boosted investor appetite for Asian emerging currencies, a Reuters poll showed on Thursday. Investors were bullish on all nine Asian emerging currencies for the first time in nearly two years, with bets firming after a massive downturn against the greenback last year due to the U.S. Federal Reserve’s aggressive monetary tightening. “Positions on the Asian currencies are likely to remain ...

The dollar edged up on Friday to pull away from multi-month lows against the euro and sterling, as investors began to train their sights on a slew of major central bank meetings next week. The U.S. Federal Reserve, European Central Bank and Bank of England are all due to make rate decisions next week as they judge what policy adjustments may be required in their battle with rampant inflation against a tough global economic backdrop. Currency analysts said they did not expect big moves to end the week, with a ...

The Pakistani rupee fell 9.6% against the dollar on Thursday, central bank data showed – the biggest one-day drop in over two decades – in a slump that may persuade the International Monetary Fund to resume lending to the country. The drop comes a day after foreign exchange companies removed a cap on the exchange rate, a key demand of the IMF as part of a programme of economic reforms it has agreed on with the cash-strapped South Asian nation. The currency’s official value closed at 255.4 rupees against the ...

Trade-weighted measures of the dollar continue to edge lower. The catalyst for modest weakness over the last 24 hours has been the Bank of Canada’s (BoC’s) decision to pause and perhaps end its tightening cycle. The move saw US yields tick modestly lower and weigh on the dollar as investors considered whether the Federal Reserve was on the verge of adopting a similar position – perhaps at the 22 March FOMC meeting. Next week’s Fed hike of 25bp looks locked in. This all fits with the narrative of easing pricing ...

The dollar fell to an eight-month low against its peers on Thursday, as a gloomy U.S. corporate earnings season stoked recession fears ahead of a slew of central bank meetings next week The euro squeezed its way to a new nine-month high of $1.09295 and was last just below that level, little changed on the day. Sterling was up 0.15% to $1.2419, mounting a new bid on territory above $1.245 having failed to get there last week. This meant the U.S. dollar index, which measures the greenback against a basket ...