Dollar stable, pound slips ahead of Bank of England meeting

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  • Dollar index slips as markets digest Fed comments
  • The BoE should leave its monetary policy unchanged
  • Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E

LONDON, June 24 (Reuters) – The dollar edged down at the start of European trading on Thursday, after spending the week gradually moving away from the two-month highs reached after the US Federal Reserve’s surprise hawkish turn in its meeting last week.

Currency markets were calm, with traders assessing various signals from Federal Reserve officials on when to withdraw monetary stimulus. Read more

The dollar index edged down to 91.738 by 07:15 GMT, after cutting some gains after hitting a two-month high of 92.408 on Friday.

The euro edged up against the dollar, up 0.1% on the day to $ 1.1939.

The dollar got some support overnight from two Fed officials, saying that a period of higher inflation in the United States could last longer than expected. Read more

But on Tuesday, Fed Chairman Jerome Powell said the price pressures should ease on their own. Read more

Six Fed officials are due to speak on Thursday, including New York Fed Chairman John Williams, who said on Tuesday that any conversation about when to adjust interest rates was still a long way off.

“It appears that the market price of the Fed’s rate expectations is already on the hawkish side, so additional comments indicating an early cut / rise now have a more contained and especially short-lived impact on sensitive assets.” , wrote ING FX. strategists in a note to clients.

“We continue to expect the market to reward currencies supported by tightening cycles (NOK, CAD, and NZD are notable examples in the G10 space), although the margin for a rally from low-yielding countries is. is probably reduced. “

Market attention is focused on the Bank of England meeting and the announcement of its policy at 11:00 GMT. No policy changes are expected, but investors will be looking for clues that the BoE will follow in the Fed’s footsteps as inflation pressures intensify. Read more

Andy Haldane will likely vote again to cut the bond buying program at his last meeting before leaving the BoE and market participants will be eager to see if other policymakers join him in doing so. Read more

The pound fell slightly at the start of the session in London, down 0.1% to $ 1.3962 and 85.495 pence to the euro.

“I don’t know if the BoE will send the signal that sterling bulls are hoping for,” Commerzbank strategist Thu Lan Nguyen wrote in a note to clients.

“I am concerned that it is too early and that the recent rise in inflation is not yet high enough. As a result, I see the potential for considerable disappointment for the pound today.”

The Australian dollar, which is seen as a liquid indicator of the forex market’s risk appetite, was flat at $ 0.75745, having gained 1.3% so far this week.

The US dollar lost 0.1% against the yen, after the pair hit a 15-month high of 111.11 overnight.

Elsewhere, bitcoin was down about 2%, to $ 33,000, having recovered somewhat from its drop to $ 28,600 on Tuesday. Ether was trading around $ 1,900.

Data on US jobs are expected later in the session.

Reporting by Elizabeth Howcroft; Editing by Ana Nicolaci da Costa

Our Standards: Thomson Reuters Trust Principles.


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