Dollar remains stable as investors wait for guidance from the Fed

Dollar remains stable as investors wait for guidance from the Fed
Dollar remains stable as investors wait for guidance from the Fed

The dollar remained broadly stable on Monday as investors waited for new clues to chart the course of U.S. interest rates after cautious comments from Federal Reserve officials, even as inflation showed signs of slowing.

The euro was little changed at $1.0865, not far from the near two-month high of $1.0895 it touched last week. It has risen 2% so far in May, boosted by a decline in the dollar following weaker U.S. growth and inflation data, as well as a recovery in the zone’s economy. euro.

Last week, U.S. consumer prices rose less than expected in April, leading markets to expect the Fed to cut interest rates by 50 basis points this year.

However, several Fed officials later expressed caution about when rates might fall, prompting markets to hover just below the 50 basis point mark.

The dollar index, which tracks the currency’s performance against six other currencies, was up slightly at 104.51. It has fallen about 2% since hitting a more than five-month high in April.

Neil Jones, who works in foreign exchange sales to financial institutions for foreign exchange services firm TJM FX, said a “barrage” of speeches from Fed officials will keep investors on their toes this week.

“If the market moves firmly in one direction or the other (on interest rate cut bets), Fed speakers will tend to act somewhat contradictory in their comments,” he said. he declared.

Four Fed speakers, including Atlanta Fed President Raphael Bostic, are scheduled to speak Monday. Markets will also focus on the minutes of the latest Fed meeting, scheduled for Wednesday.

Survey-based economic indicators for the euro zone, Germany, the United Kingdom and the United States are also expected this week, along with other speeches from central banks.

Sterling hit a two-month high of $1.2711, and held just below that level, ahead of the UK inflation report due on Wednesday.

The Japanese yen held steady at 155.73 per dollar as traders watched for any signs of government intervention. The currency has moved in narrow ranges over the past two trading days after a tumultuous start to May, following rounds of monetary interventions suspected by Tokyo of supporting the yen.

Mr Jones said he expected rising gold and copper to support the currencies of commodity-exporting countries, such as Australia, in the coming months.

The Australian dollar remained stable at $0.6687, but rose 3.3% this month, driven by high Australian inflation.

Short supply, sustained global demand and big bets by speculators have sent copper prices soaring in recent weeks.

Oil prices rose slightly on Monday after Iran’s president died in a helicopter crash, while Saudi Arabia’s king faces health problems, raising the possibility of greater instability in the Middle East.

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