May 16, 2021

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Dollar grinds lower on bets U.S. tapering remains distant

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TOKYO — The dollar edged lower on Monday

amid speculation that U.S. Federal Reserve Chairman Jerome

Powell will shun talk of tapering bond purchases at a policy

meeting this week.

The euro rose to a near two-month high against the greenback

before data later on Monday forecast to show an improvement in

German business sentiment, which would bolster hopes for a

brighter economic outlook.

Powell is likely to face questions over whether an improving

labor market and rising coronavirus vaccinations warrant a

withdrawal of monetary easing, but most analysts expect him to

say such talk is premature, which would put downward pressure on

Treasury yields and the dollar.

“The dollar is likely to continue to trend lower in line

with the gathering momentum in the world economy,” analysts at

Commonwealth Bank of Australia wrote in a research note.

“We expect the Fed policy meeting to be a non-event for the

dollar. The U.S. economy is a long way from meeting the

‘substantial further progress’ threshold for the Fed to taper

its asset purchases.”

The dollar stood at 107.75 yen, close to its lowest

since March 4.

The euro rose to $1.2110, adding to gains made on

Friday after positive data on European services and

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manufacturing activity.

A survey from Germany’s Ifo institute due later on Monday is

expected to show business conditions continued to improve in

Europe’s largest economy.

The British pound was quoted at $1.3897, adding to

a 0.3% gain in the previous session.

The dollar was little changed at 0.9128 Swiss franc

, close to a two-month low.

The Fed’s next meeting ends on Wednesday, and while no major

policy changes are expected, investors will pay close attention

to Powell’s comments after the meeting.

Rising coronavirus vaccination rates and an improving

economic outlook are reasons to be optimistic, but many traders

and analysts say Powell is likely to reiterate his commitment to

keep easy policy in place for an extended period.

U.S. funds have been selling the dollar against the yen

recently in Asian trading, which is an additional sign that

major investors expect lower U.S. Treasury yields to push the

dollar lower, some traders in Tokyo said.

In emerging markets, traders are watching the Turkish lira

to see if it will test its all-time low of 8.58 per

dollar due to worsening relations with the United States and

worries about a dovish central bank governor. The lira was last

quoted at 8.4285.

The onshore yuan edged up to 6.4866 per dollar,

just shy of a six-week high.

Elsewhere, the Australian and New Zealand dollars

rose toward one-month highs but are likely to track

moves in global commodity prices, traders said.

In the cryptocurrency market, Bitcoin reclaimed

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the $50,000 mark and smaller rival Ether rose,

recouping some of their losses from last week triggered by U.S.

President Joe Biden’s plan to raise capital gains taxes for

wealthy investors.

========================================================

Currency bid prices at 0159 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.2110 $1.2097 +0.11% -0.88% +1.2112 +1.2089

Dollar/Yen 107.7500 107.8800 +0.00% +4.45% +107.9350 +107.8250

Euro/Yen

Dollar/Swiss 0.9128 0.9137 -0.09% +3.18% +0.9140 +0.9128

Sterling/Dollar 1.3897 1.3881 +0.14% +1.74% +1.3900 +1.3872

Dollar/Canadian 1.2456 1.2475 -0.18% -2.21% +1.2490 +1.2453

Aussie/Dollar 0.7770 0.7746 +0.36% +1.06% +0.7773 +0.7735

NZ 0.7211 0.7195 +0.26% +0.45% +0.7216 +0.7191

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Stanley White; editing by Richard Pullin)

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Reuters

2021-04-25 22:20:18

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