Markets await rate hike decision
Rate hike indecisiveness has pinned the greenback down as investors lose faith in the Federal Reserve in the US.
Financial investors' lack of faith in another rise in US interest rates this year kept the dollar pinned back on Monday at the start of a week packed with speeches from Federal Reserve and other senior central bank officials.
A small dip for the yen early in European trade was driven by mildly improved appetite for risk among investors and helped keep the dollar index roughly flat on the day as Britain's pound inched higher.
Pound sterling recovered 1.5 cents from lows hit in the past 10 days due to uncertainty over the makeup of the next government, helped by a shift by several Bank of England policymakers towards raising interest rates this year.
But markets so far loathe to buy the Fed's own line that it will raise US rates once more before the end of 2017 and another three times next year. That has kept Treasury yields at historically low levels and halted any progress for the greenback.
“The market continues to call the Fed's bluff on its intentions to change rates. I don't think anything (Fed chair) Janet Yellen can say this week will change that," said Stephen Gallo, head of European FX strategy with Bank of Montreal.
“We were saying buy dips in cable and euro (against the dollar) last week. We still look for the same this week.”
“The main reason behind the weakness of the dollar, which has lost its upward momentum since the Fed rate hike, is US yields stuck at low altitude," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“Yields appear to better reflect US fundamentals relative to equities, and in focus this week are political developments and the various indicators due for release."
NAMPA/REUTERS
A small dip for the yen early in European trade was driven by mildly improved appetite for risk among investors and helped keep the dollar index roughly flat on the day as Britain's pound inched higher.
Pound sterling recovered 1.5 cents from lows hit in the past 10 days due to uncertainty over the makeup of the next government, helped by a shift by several Bank of England policymakers towards raising interest rates this year.
But markets so far loathe to buy the Fed's own line that it will raise US rates once more before the end of 2017 and another three times next year. That has kept Treasury yields at historically low levels and halted any progress for the greenback.
“The market continues to call the Fed's bluff on its intentions to change rates. I don't think anything (Fed chair) Janet Yellen can say this week will change that," said Stephen Gallo, head of European FX strategy with Bank of Montreal.
“We were saying buy dips in cable and euro (against the dollar) last week. We still look for the same this week.”
“The main reason behind the weakness of the dollar, which has lost its upward momentum since the Fed rate hike, is US yields stuck at low altitude," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“Yields appear to better reflect US fundamentals relative to equities, and in focus this week are political developments and the various indicators due for release."
NAMPA/REUTERS
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