Investing.com – The dollar drifted lower and the euro found its footing on Monday as cooler oil prices and falling Treasury yields took some of the sting out of the greenback, while traders now brace for a week in which five central banks take centre stage.
The euro rose 0.16% to $1.122, helped by relief that France was spared a Moody’s downgrade despite social unrest. The reprieve is partial. Moody’s kept its negative outlook on France, and S&P is due to review the country’s rating on Nov. 27. Sterling strengthened 0.1% to $1.3385.
The dollar index eased about 0.1% to 101.65, extending its retreat from the 18-month high it hit earlier this month. Brent crude slid roughly 2% to $114.51 a barrel as Qatari mediators travelled to Tehran on Sunday in efforts to de-escalate tensions in coordination with Washington.
The calm looks fragile. The Houthis said they struck an airport and oil facilities in Saudi Arabia on Saturday, and Brent rose 6% last week. Analysts say the respite may prove temporary, with US midterm elections on Nov. 3 still ahead.
Five central banks
All eyes turn to the Federal Reserve, which opens a two-day meeting on Tuesday and is widely expected to hold its target range at 3.75%-4.00% on Wednesday. That would follow September’s first rate hike in more than three years. Futures price less than a 10% chance of a hike on Wednesday, but about 80% for December, so traders will parse Chair Kevin Warsh’s press conference for any hint of what comes next.
A packed US data calendar could add clues. October consumer confidence lands Tuesday. On Thursday come third-quarter GDP, expected to show growth of about 3.2%, the September PCE price index, with headline inflation forecast at 3.6% from 3.4%, and weekly jobless claims. Claims fell to 194,000 last week, the lowest since July.
The European Central Bank follows on Thursday. It is expected to leave its deposit rate at 2.50%, with ING looking to December for the next hike, as energy-driven inflation, which hit 3.7% in September, keeps policymakers on guard.
The yen was little changed at 156.92 per dollar. The pair seesawed last week, touching 158.68 on Oct. 20 before sliding to 156.06 on Friday as investors sought havens. Remarks from a Japanese minister seen as signalling caution on tightening helped it rebound.
