© Reuters. FILE PHOTO: An illustration shows US $ 100 bills.
By Stanley White TOKYO (Reuters) – The dollar suffered losses against most currencies on Monday amid speculation that US Federal Reserve Chairman Jerome Powell will avoid talking about a gradual reduction in purchases of bonds at a policy meeting this week. The euro rose to a nearly two-month high against the dollar before Monday’s data forecast an improvement in German business sentiment, bolstering hopes for a brighter economic outlook. Powell is likely to face questions about whether the improving job market and the rise in coronavirus vaccines justify the withdrawal of monetary easing, but most analysts expect him to say that such a conversation is premature, which would put pressure on the lowers yields on Treasuries and the dollar. “The dollar is likely to continue its downward trend in line with the momentum it is gathering in the global economy,” analysts at the Commonwealth Bank of Australia (OTC 🙂 wrote in a research note. “We hope that the Fed policy meeting is not an event for the dollar. The US economy is a long way from reaching the threshold of ‘additional substantial progress’ for the Fed to reduce its asset purchases.” The dollar stood at 107.88 yen, close to its lowest level since March 4. The euro rose to $ 1.2105, adding to Friday’s gains on positive data on European services and manufacturing activity. A survey by Germany’s Ifo institute to be released later on Monday is expected to show that business conditions continued to improve in Europe’s largest economy. The British pound traded at $ 1.3876 after a 0.3% gain in the previous session. The dollar was little changed at 0.9136 Swiss francs, close to a two-month low. The next Fed meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to Powell’s comments after the meeting. Rising coronavirus vaccination rates and improving economic prospects are reasons to be optimistic, but many traders and analysts say Powell is likely to reiterate his commitment to maintaining an easy policy for an extended period. US funds have been selling the dollar against the yen recently in Asian trading, which is a further sign that major investors expect lower yields on US Treasuries to push the dollar lower, some traders said. in Tokyo. Speculators’ net bearish bets on the dollar have risen to a three-week high, according to Reuters calculations and data from the US Commodity Futures Trading Commission, which also point to further declines for the dollar. . In emerging markets, traders are watching the Turkish lira to see if it will test its record low of 8.58 to the dollar due to worsening relations with the United States and concerns about a dovish central bank governor. The lira was last traded at 8.4325. Elsewhere, Australian and New Zealand dollars traded near month-long highs, but movements in global commodity prices are likely to follow, traders said. In the cryptocurrency market, it recovered the $ 50,000 mark and smaller rival Ether rose, recouping some of its losses from last week triggered by US President Joe Biden‘s plan to raise taxes on the profits of capital for wealthy investors.