The U.S. dollar held steady on Monday after last week’s swings, with investors focusing on a series of Federal Reserve speeches that could shed light on upcoming monetary policy, ahead of critical inflation figures.
At 04:20 ET (08:20 GMT), the Dollar Index, which tracks the greenback against six major currencies, was slightly lower at 97.155. Last week, the index hit its lowest levels in over three years following the Fed’s interest rate cut, before rebounding amid volatile trading.
Eyes on Fed officials
Market participants are monitoring remarks from several Fed policymakers for clues about the trajectory of interest rates following last week’s restart of the rate-cut cycle. John Williams, Thomas Barkin, and Stephen Miran are speaking Monday, while Raphael Bostic, Michelle Bowman, and Fed Chair Jerome Powell are scheduled for Tuesday.
With two more Fed meetings left this year, these comments, along with upcoming economic releases, will be pivotal in shaping investor sentiment. The U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, is due Friday and is expected to show a slight rise to 2.8% from July’s 2.6% annual figure.
“Plenty of Fed speakers this week will clarify the FOMC’s policy views after Chair Powell’s cautious remarks last week,” ING analysts said. “With the Dot Plot signalling two more cuts this year, we don’t expect much support for the dollar, which is looking moderately expensive in the short-term.”
European currencies
EUR/USD edged up 0.1% to 1.1762, ahead of the eurozone consumer confidence report later in the session. “This week’s eurozone calendar revolves around tomorrow’s PMIs, which are expected to flatten up after some good August readings. Later this week, the German Ifo will complete the activity survey picture,” ING added. “EUR/USD’s short-term fair value is 1.190 as of this morning, and we see upside risks beyond the 1.180 level this week as the dollar may shed its post-Fed gains.”
GBP/USD climbed 0.2% to 1.3499, recovering from last week’s two-week low, pressured by rising public borrowing and a Bank of England rate decision highlighting the balance policymakers must strike between growth and inflation.
Asian currencies
USD/CNY fell slightly to 7.1138 after the People’s Bank of China left benchmark loan prime rates unchanged at 3.0% for one-year and 3.5% for five-year, maintaining historically low levels amid domestic economic challenges. The central bank is likely waiting for the Fourth Plenary Session in October to reassess policy.
USD/JPY rose 0.1% to 148.09, trading in a narrow range after the Bank of Japan kept rates steady last week. AUD/USD slipped 0.2% to 0.6579 following Reserve Bank of Australia Governor Michele Bullock’s remarks that recent economic data largely met expectations, though global uncertainties remain.
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