Dollar Stabilizes; Regains Potency To Counter Competitors
On Monday, the U.S. dollar was mainly flat in the forex market after the European trading.
Moreover, the U.S. holiday has offered a little incentive for traders to take risks.
Meanwhile, the greenback still looks robust versus its main rivals.
The Dollar Index Futures, which tracks the greenback counter to a basket of other currencies, was flat at 97.40.
To add, the USD/JPY pair has traded flat at 110.15, EUR/USD pair at 1.1095, ahead 0.1%.
On the flip side, the GBP/USD pair at 1.2979, below 0.2% in some forex trading.
Last Friday, the figures were by the Commerce Department that demonstrated the U.S. housing to start in December.
They were well higher than the economists’ valuations for 1.38 million and were the most significant gain in 13 years.
Meanwhile, retail sales were also on the upswing, and a gauge of production activity has recovered to its most significant in eight months.
However, the actual data lessened chances that the Federal Reserve would cut rates when it meets later this month.
The European Central Bank, along with the Bank of Japan, are not to be expected to produce any changes in their first policy meetings of the year this week.
On the other side, the Bank of England is broadly on anticipation to cut rates in the near future.
The Dollar To Linger In The G3 Space
In a research note, analysts Chris Turner, Petr Krpata, and Francesco Pesole at ING indicate that the dollar story is remaining firm in the G3 space.
To add, “Talk of a Republican Tax Cut 2.0 may cement that trend – at least in the G3 space. U.S. macro weakness looks less of a concern now. Still, the market will soon turn to U.S. election risks – especially were (Elizabeth) Warren or (Bernie) Sanders to win the Democratic nomination,” they said.
Elsewhere, the Euro Pound Sterling (EUR/GBP) exchange rate inched up slightly. It has left the pairing trading at around £0.8549.
Market attention has changed to the near-term position for U.K. monetary policy. It is due to a lack of data from both the U.K. and the Eurozone.
At the start of the week, the Pound weakened as investors were cautious ahead of this month’s Bank of England (BoE) conference.
Markets anticipate that the BoE may reduce rates if U.K. company surveys released later in the week fail.
A week ago, prospects of the bank that will cut interest rates stood at around 70%. It has been increasing rapidly from just a 10% chance of a quarter-point cut.
Meanwhile, the European Central Bank’s (ECB) will see its first meeting of the year this coming week.
It is in anticipation that the conference will launch a strategy review, comprising a rethink of the inflation goal that the bank has steadily been incapable of meeting since 2013.
