Investing.com – The U.S. dollar traded largely unchanged Monday in the early European session, near multi-week lows as traders seem reluctant to take news positions at the start of a week that includes a policy-setting meeting by the Federal Reserve.
At 02:55 ET (06:55 GMT), the , which tracks the greenback against a basket of six other currencies, traded flat at 103.153, having dropped nearly 0.5% last week, its worst weekly fall since mid-April.
Traders keep wary eye on economic data
The dollar retreated last week after data showed that the number of Americans filing for unemployment benefits surged to the highest level in more than 1 1/2 years last week, pointing to the pausing its year-long rate hiking cycle when officials conclude their two-day meeting on Wednesday.
However, traders seem reluctant to push the dollar even weaker at the start of the new week as Tuesday’s U.S. could alter sentiment if inflation continues to remain elevated.
“A jump in U.S. jobless claims sent the dollar lower across the board …, confirming how FX markets have an extremely elevated sensitivity to data at this moment,” said analysts at ING, in a note.
ECB to hike again, for now…
edged higher to 1.0753, with the European Central Bank expected to lift its interest rates by 25 basis points once more when the officials meet on Thursday.
However, doubts remain over how much higher the will go with hikes, given euro area fell faster than expected in May and data last week showed that the bloc’s economy fell into in the first three months of the year.
“A 25bp rate hike looks like a done deal for next week’s European Central Bank meeting. However, with growth disappointing, the economic outlook getting gloomier and inflation dropping, arguments for several more rate hikes are becoming weaker,” ING added.
BOJ to maintain loose policy
rose 0.1% to 139.49, with the expected to maintain its ultra-loose monetary policy this week, while forecasting a moderate economic recovery.
A dovish outlook on the BOJ is expected to keep the yen under pressure in the coming months, as the gap between local and overseas rates widens.
Elsewhere, rose 0.1% to 1.2575, rose 0.2% to 0.6752, and rose 0.2% to 7.1408, with the Chinese yuan falling to a six-month low of 7.1451 against the dollar, as more state-owned Chinese banks began cutting interest rates on yuan deposits.
The move heralds a broader cut in the central bank’s later this month, as it struggles to shore up economic growth.
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