Dollar hits recent lows ahead of central bank meetings
The greenback traded near recent lows on September 8 as traders are waiting for central bank meetings from Australia to Europe and Canada this week. Remarkably, the meetings are likely to provide clues of making progress towards policy normalization.
The chance of a tapering delay in America, after weaker-than-anticipated jobs data, has put extra focus on policymakers. Moreover, it put pressure on the greenback. Australia’s announcement will come at 0430 GMT.
The risk-sensitive currency, the Australian dollar, has paused a recent rally and traded at $0.7447. Markets are waiting to see if lockdowns in Melbourne and Sydney have derailed plans to taper bond purchases.
According to IG Markets analyst Kyle Rodda, if the central bank halts its tapering plans, traders are expected to sell the Australian dollar, possibly pushing it towards its support level of about $0.7420. He also added that a hawkish central bank would send the currency higher.
Moreover, traders are also focused on Chinese trade data, which is due around 0300 GMT. It is anticipated to be weighed down by a slowdown in growth and disruption from coronavirus-related port closures. On September 8, the Bank of Canada is likely to keep rates steady.
Traders are also waiting for European Central Bank meeting on Thursday
The Canadian dollar stands close to its highest level in about three weeks. The currency is above its 200-day moving average at C$1.2525.
The market is also waiting for European Central Bank meeting due on Thursday, focusing on a potential cut to the pace of bond purchases. Economists polled by Reuters anticipate a slowdown in ECB bond purchases, especially after data last week showed inflation rising to a 10-year peak.
The euro hit a one-month peak in the wake of disappointing U.S. labor data on Friday. However, it has been unable to hold above $1.19 and last traded at $1.1881.
Moreover, safe-haven Japanese yen traded at 109.76 against the dollar while the British pound was steady at $1.3848. The New Zealand dollar surged 0.3%, as the country seems to be containing a COVID-19 outbreak.
Friday’s payrolls figures, showed 235,000 jobs created in August against economists’ expectations of 728,000. Analysts say that these were enough to lower the chances of a tapering announcement this month.
In cryptocurrencies, the dominant cryptocurrency, bitcoin, held above $50,000 at $52,497. Moreover, the second-largest cryptocurrency, Ethereum, traded little changed at $3,897 after exceeding $4,000 last week for the first time since mid-May.
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