Around 10 p.m., the euro was almost at equilibrium (+0.07%) once morest the dollar, at 1.0023 dollars for one euro, while the pound sterling advanced by 0.14%.
The dollar was little changed once morest the euro, the pound sterling or the Swiss franc on the eve of the start of the meeting of the American central bank (Fed), while several Asian currencies fell once more once morest the greenback.
Around 8:00 p.m. GMT, the euro was almost at equilibrium (+0.07%) once morest the dollar, at 1.0023 dollars for one euro, while the pound sterling advanced by 0.14%.
For Mazen Issa of TD Securities, traders are on hold ahead of the Fed’s Monetary Policy Committee meeting, which opens Tuesday, with a decision expected Wednesday.
Traders assign the scenario of a rise of 0.75 percentage points a probability of 82%, according to the model of the CME Exchange.
“A rate hike on Wednesday coupled with a commitment to keep rising might keep the dollar moving higher,” said Joe Manimbo of Convera.
Even if the market has priced in the idea of a 0.75 percentage point hike, Fed Chairman Jerome Powell “might be even tougher than he has been so far,” Mazen warns Issa. “The question is how attacking he is going to be during the press conference.”
Mr. Powell might also provide information on the “final” rate (terminal rate), the peak of this cycle of monetary tightening, which traders are still struggling to understand.
The target favored by operators is that of a rate of 4.50%, or even 4.75%, in March, at its peak, before a decline.
“The Fed might take a lot of different paths during this meeting,” Mazen Issa warned, prompting traders to be cautious.
In Asia, the tumble continued Monday for several currencies in the region, including the Malaysian ringgit, returned to its lowest level in more than 24 years once morest the dollar.
The Taiwanese dollar hit a three-year low once morest the greenback.
The Fed’s monetary policy is putting pressure on many of these currencies, including the Chinese yuan and Japanese yen.
“They depend a lot on global demand” and the health of international trade, which is showing increasingly pronounced signs of slowing down, underlines Mazen Issa.
In addition, adds the analyst, a context of deterioration in the economic situation generally benefits the dollar, considered a safe haven.
