CURRENCIES: Dollar Heads Lower At Start Of Busy Central Bank Policy Week
18 December 2018 - 02:07AM
Dow Jones News
By Anneken Tappe, MarketWatch
The dollar slipped versus it major rivals on Monday as investors
got ready for a flurry of monetary-policy decisions in a data-heavy
week.
The ICE U.S. Dollar Index , which measures the greenback against
a basket of six rivals, was down 0.3% at 97.147.
The euro holds the most weight in the gauge. The shared currency
last bought $1.1347, up from $1.1309.
Traditional haven currencies, Japan's yen and Switzerland's
franc were both stronger against the dollar.
This week, market participants are focusing on an expected
interest-rate increase by the Federal Reserve on Wednesday--the
fourth and final one this year. Market expectations for 2019 rate
hikes have begun to wane of late on the back of dovish comments
from Fed officials including Chairman Jerome Powell.
Don't miss:The big question this week: Is the Fed about to
completely break this market?
(http://www.marketwatch.com/story/the-big-question-this-week-is-the-fed-about-to-completely-break-this-market-2018-12-17)
President Donald Trump, who has previously been critical of the
Fed's intent to raise interest rates further, on Monday morning
tweeted this:
(https://twitter.com/realDonaldTrump/status/1074657278974939138)
In the first U.S. data point of the week, the Empire State
manufacturing index fell to a 19-month low
(http://www.marketwatch.com/story/empire-state-factory-index-slumps-in-december-2018-12-17).
In other monetary policy updates this week, the Bank of Japan
will make its announcement late Wednesday. The Bank of England
meets on Thursday.
Investors will also keep an eye on China's Central Economic Work
Conference and a speech by President Xi Jinping on Tuesday.
In the U.K., Prime Minister Theresa May warned members of
Parliament that holding a second Brexit referendum would hurt the
faith of the British people in the government. May canceled a vote
on the Brexit deal she agreed with the European Union last week,
expecting she would lose it. She subsequently survived a vote of
no-confidence from her own party as well, but solutions to the
Brexit dilemma are still hard to come by.
Read: Theresa May expresses confidence she'll be able to amend
EU deal
(http://www.marketwatch.com/story/brexit-briefing-theresa-may-expresses-confidence-shell-be-able-to-amend-eu-deal-2018-12-14)
While trading volumes typically drop off in the last few
sessions of the year, "Brexit will continue to be a source of
potentially extreme volatility for the [British] pound over the
next couple of weeks," said Craig Erlam, senior market analyst at
Oanda.
Sterling was stronger on Monday, buying $1.2619, versus $1.2583
late Friday in New York. But despite trading in the green for the
moment, the currency has fallen against both the dollar and the
euro on the month and the year, according to FactSet.
"The odds are stacked against [May] at this point and her
'friends' in Europe are in no rush to offer a lifeline. With
support for a second referendum gathering momentum over the
weekend, there is no incentive for them to back down in the issue
of the [Northern Irish border] backstop," Erlam said. "It seems
there is a number of steps that come before parliament accepts a no
deal, which may force the EU into concessions, at least one of
which could realistically see the U.K. remain in the block after
all."
(END) Dow Jones Newswires
December 17, 2018 09:52 ET (14:52 GMT)
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