Dollar eases as week of key central bank decisions kicks off

NEW YORK: The US dollar edged down against a basket of currencies on Monday but remained near a six-month high, as traders looked ahead to decisions on interest rates this week from the Federal Reserve, the Bank of England and the Bank of Japan.

Currency moves were largely muted on Monday as investors were hesitant to make big directional wagers ahead of the week’s slew of central bank interest rate decisions.

“The plethora of event risk and central bank meetings coming up is keeping a lid on volatility, and with traders really not wanting to chase moves or take on significant risk before the FOMC, BoE, BoJ, etc.,” Michael Brown, market analyst at Trader X, said.

The US dollar index, which measures the currency against six major counterparts, was down 0.27% at 105.11, not far from the six-month high of 105.43 touched on Thursday. The index rose for its ninth straight week last week, its longest winning streak in nearly a decade.

US Treasury Secretary Janet Yellen on Monday said she saw no signs the US economy is entering a downturn. Fed fund futures show investors expect the Federal Reserve to keep interest rates on hold in the 5.25% to 5.5% range on Wednesday.

“In the grand scheme of things we’re quite positive on the dollar,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

“The US economy is outperforming both Europe and Asia, especially China.” The euro was up 0.27% against the dollar at $ 1.0687. The European Central Bank raised interest rates to 4% last week, but said this hike could be its last. Traders think Sweden’s central bank is highly likely to raise interest rates on Thursday by 25 basis points to 4%, piling more pressure on the economy.

The pound was 0.11% higher at $1.23965. Traders see the Bank of England raising rates by 25 basis points to 5.5% on Thursday, in what could be its final hike.

In cryptocurrencies, bitcoin rose 2.58 % to $ 27,220, a more than two-week high.