Dollar near 6-week high

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SINGAPORE- The dollar was broadly steady near a six-week high on Thursday, as investors await GDP and other data this week to gauge where US rates are headed, while the euro was soft ahead of the European Central Bank’s policy meeting later in the day.

Data overnight showed US business activity picked up in January and inflation appeared to abate, with a measure of prices charged by companies for their products falling to the lowest level in more than 3-1/2 years.

The dollar index which measures the US currency against six rivals, rose 0.06 percent  to 103.33 after dropping 0.2 percent  on Tuesday as traders consolidated their positions ahead of the Federal Reserve’s policy meeting next week.

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The first reading of US gross domestic product for the fourth quarter is expected to show an economy resilient to the steep interest rate increases, said Carol King, a currency strategist at Commonwealth Bank of Australia.

“Evidence of still robust US economic activity, against the backdrop of weak European and Chinese growth, can keep the USD supported in our view,” she said.

Economists polled by Reuters expect fourth-quarter US GDP to have increased at a 2 percent  annualized rate.

Other US data this week includes the Fed’s favorite gauge of inflation – the personal consumption expenditure (PCE) data – on Friday.

Next week, the Fed is widely expected to stand pat but comments from Chair Jerome Powell will be intensely scrutinized to assess if the US central bank is ready to start cutting interest rates.

Traders have drastically scaled back bets on early and deep rate cuts. Markets are currently pricing in a 41 percent  chance of a cut in March, the CME FedWatch tool shows, down from 88 percent  a month ago.

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