Reuters. File photo: This image, taken on May 26, 2020, shows a US dollar note. REUTERS / Dado Ruvic
By Tom Westbrook
SINGAPORE (Reuters) – The dollar has bounced from recent lows and remained firm in isolated trades on Tuesday ahead of a handful of data releases and a central bank meeting that investors expect will guide the rate outlook.
The euro fell 0.3% overnight in anticipation of a softer-than-expected German business sentiment and when the European Central Bank (ECB) meets on Thursday.
The euro last purchased at 15 1.1598, near a one-week low.
The other overnight rice was modest, priced in dollars, and falling slightly on sterling. It was stable on Tuesday without a slight increase in the Japanese yen to 113.83 yen and a slight decline in the Aussie.
Rose held at 93,856.
Analysts at Westpac said in a note, “The dollar seems to be finding its footing in the mid-’93s, as the ECB meeting on Wednesday focused on US growth data.”
“The focus will shift to the ECB and US Q3 GDP this week. The ECB is likely to underscore the dovish guidance, while the US GDP rebound will look suspended, but price pressures are set to build,” they said, setting a scenario for the Federal Reserve to buy bonds as early as next week. Declaration reduction.
“Everyone has been told that the short-term yield spread trend for the dollar should be maintained and the dollar should be released with a bid tone within the next few weeks.”
Central bank meetings in Japan and Canada are also scheduled for this week, as quarterly inflation data is released in Australia where rate markets strongly disagree with the Reserve Bank of Australia’s (RBA) view.
The Australian dollar rose to 7 0.7503 after rising to 0 .07546 last week, the highest since July. Kiwi held at 7 0.7165.
Economists expect Australia’s trimmed average consumer price growth, the central bank’s preferred measure, to accelerate from 1.6% in the previous three months to 1.8% year-on-year in the September quarter.
Inflation in Canada has also put pressure on the central bank to raise the forward rate and traders are watching Wednesday’s meeting for any hawk clues.
The Canadian dollar stood at C $ 1.2383 per dollar, hitting a four-month high last week, while the gap between Canadian and US 2-year yields on Canadian bonds doubled from last month to 41 basis points.
“Any Hawkeyes undertone will make me extra excited about coming back to 1.20,” said Societe Generale (OTC 🙂 strategist Kit Jukes.
The Bank of Japan also met on Wednesday and Thursday and sources told Reuters it was discussing a COVID-19 loan program in phases, although no decision is likely to be made before December and no policy change is expected this week.
Outside of Friday, the Fed, the RBA and the Bank of England will meet next week.
Sterling has been strong on the prospect of a higher rate and last settled at $ 1.3758.
Brian Martin, senior international economist at ANZ Bank, said, “Small open economies tend to increase the price of imports, which could quickly enter the inflation equation.”
“Financial constraints are justified in this environment. One issue in the UK and the Bank of England seems ready to join the initial rate tightening soon. We have moved forward, this quarter, when we expect the BoE rate to start. Normalization.”