Dollar Eases Ahead of Key G-10 Central Bank Meetings This Week

  • Sterling pares early losses as fast money lacks follow through
  • Loonie rises as Mnuchin comments on outcomes for Canada trade

The U.S. dollar weakened against most of its Group-of-10 peers as investors began tweaking positions ahead of multiple central bank policy decisions this week.

The Federal Reserve is scheduled to announce its policy decision Wednesday followed by the Bank of England and the Swiss National Bank Thursday while the Bank of Japan rounds up the week Friday. These come amid the second round of French parliamentary elections over the weekend. Leveraged accounts initially sold the pound in early morning trade after U.K. Prime Minister Theresa May’s hopes of clinging to power was dealt a fresh blow.

“We’re not expecting strong hints for a September follow up, but we do expect the Fed dots to continue to show at least one more rate hike as the medium projection,” Peter Dragicevich, a foreign exchange strategist at Nomura Singapore Ltd., said in a Bloomberg Television interview. “We might get a bit of dollar strength later this week, but it won’t be long lasting.”

  • Bloomberg Dollar Spot Index is little changed even as 10-year Treasury yield climbs 2bps to 2.22%
  • USD/JPY down 0.1% to 110.20 versus 110.16/44 range
    • North Korea says it has moved closer to test-firing an intercontinental ballistic missile with the potential of hitting the U.S. mainland
  • USD/CAD declines 0.2% to 1.3444 versus 1.3444/68 range
    • When it comes to trade issues with Canada, the U.S. administration is very focused “on an outcome that’s good for American workers and good for the Canadian economy,” U.S. Treasury Secretary Steven Mnuchin said in a joint press conference with Canadian Finance Minister Bill Morneau on Friday
  • GBP/USD little changed at 1.2744 after falling as much as 0.3% to 1.2706 earlier
    • Spot pair’s losses were recouped as the broadly weaker dollar themes surfaced, according to an Asia-based FX trader
    • U.K. Prime Minister’s office was forced to admit it hadn’t reached a deal to govern with the support of Northern Ireland’s Democratic Unionist Party, hours after announcing it had
    • BOE Governor Carney to speak at Mansion House in London Friday
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