HomeNewsDollar under pressure as central bank meetings loom

Dollar under pressure as central bank meetings loom

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LONDON — Expectations that the Federal Reserve will reaffirm its commitment to keeping United States interest rates near zero left the dollar at a five-week low yesterday, while concerns about China’s stuttering economy pressured commodity markets.

Reuters

The Federal Reserve, the European Central Bank and the Bank of England meet this week. All are expected to repeat or refine their “forward guidance” that borrowing costs will remain extraordinarily low as long as growth is sub-par and inflation poses no threat.

The Fed will be most closely scrutinised, having signaled plans to begin phasing out its ultra accommodative policy this year. Most economists are eyeing a September start but markets have scaled back views of any aggressive changes.

The dollar, which shed 1,2% last week for its third straight weekly loss, remained under pressure at 81,540 by mid-morning in Europe, having earlier hit a one-month low against the yen.

“The dollar faces a lot of key event risk in the week ahead with the release of the US Q2 GDP report and the latest FOMC policy meeting on Wednesday, followed by the release of the US employment report for July on Friday,” said Lee Hardman, currency strategist at Bank of Tokyo Mitsubishi.

Wall Street was expected to open lower with falls of between 0,15-0,25% seen for the S&P 500 and Dow Jones Industrial Average .DJI.

European share markets remained buoyant though as two more giant merger deals, this time in the media and pharmaceuticals sectors, added to a flurry of M&A activity in recent weeks.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 0,4% at 1,212 points by 0745 GMT, with London, Frankfurt and Paris 0,4-0,5% higher.

Commodities markets were mostly softer, with both oil and copper at or near three-week lows. Concerns about demand weighed on crude, while nervousness ahead of Chinese manufacturing data on Thursday hit copper.

With investors bracing for another round of disappointing economic news from the world’s No. 2 economy Asian markets had been generally weaker..MIAPJ0000PUS

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