SINGAPORE, April 24 (Reuters) – The dollar fell to a more than one-week low against major currencies on Monday in generally thin trading, as investors continued to price in interest rate cuts this year by the Federal Reserve after a widely expected rate increase at next week’s policy meeting.
The Japanese currency, on the other hand, also struggled amid remarks from new Bank of Japan governor Kazuo Ueda about the need to maintain monetary easing ahead of a closely watched Bank of Japan meeting on Friday.
Aside from the Fed, the European Central Bank also meets next week and is also expected to lift rates by 25 basis points (bps), with the possibility of a 50-bps hike as well. Euro zone inflation and growth data are also due later this week.
In afternoon trading, the dollar index fell 0.3% to 101.34 after earlier dropping to a 10-day low.
“The dollar is struggling to build on last week’s gain as coming data could show slower U.S. growth and lower inflation, outcomes that would cement the case for a mid-year rate pause,” said Joe Manimbo, senior market analyst at Convera in Washington.
Fed policymakers are widely expected to raise rates by another 25 bps at next week’s meeting, but they are seen pausing in June. The rate futures market has also factored in roughly 50 bps of rate cuts by the end of the year.
The euro was up 0.5% against the dollar at $1.1045, hitting a 10-day high of $1.1050. It was back above $1.10 for the first time since it hit a 14-month high of $1.10755 earlier this month.
Against the yen, the euro hit its highest since December 2014. It was last up 0.6% at 148.33 yen .
The dollar also rose versus the Japanese currency, and was last up 0.1% at 134.275 yen .
“The dollar is trading … well within well-worn ranges,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“It’s the calm before the storm. Next week we have the ECB and the Fed meetings, as well as the U.S. jobs data. I would be surprised if people take big bets this far away from those events.” Original Source
