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Dollar Steady Ahead of Fed, ECB Meeting

The US dollar stood steady on Monday, following upbeat jobs data and as the fx market awaits central bank meetings set to take place later this week. However, concerns over trade talks kept the currency’s gains in check.

The dollar index barely changed at $97.66 against a basket of six major currencies, after climbing 0.3% on Friday.

The euro traded at $1.1063, having reached a one-week low of $1.10395 on Friday.

Against the yen, the greenback slightly shed 0.09% to ¥108.49, after rising ¥108.92 due to the US employment data.

Figures released by the Labor Department showed on Friday that non-farm payrolls were up by 266,000 in November. But the unemployment rate dropped 3.5% to its lowest in almost half a century.

The data indicated the 17-month trade dispute between Washington and Beijing has not yet struck the broader US economy.

Still, traders see a potential risk if trade tensions intensified further. This is especially if President Donald Trump proceeds with planned import duties on $156 billion worth of Chinese goods on December 15.

The dollar advanced 0.07% to CN¥7.0397 against the yuan, after China’s exports fell at an annual rate of 1.1% in November, compared with the 1.0% growth forecast.

The latest exports slump marked the country’s fourth straight month of decline.

The trade-sensitive Australian dollar was down 0.17% to $0.6826.

Meanwhile, the British pound added 0.2% to $1.3162, as forex traders anticipate the UK general election.  The election is scheduled this week and is thought to determine the direction of Brexit.

FX Market Looks to Central Bank Meetings

Investors are likely to shift their focus on the upcoming central bank meetings. The Federal Reserve will be first on Wednesday.

The Fed expected to leave interest rates unchanged at the end of its policy meeting. This is after having cut the benchmark rate three times this year to keep the US economy from a global slowdown.

Following the final rate reduction, Fed Chair Jerome Powell stated that both the country’s economy and monetary policy are in a good place. He suggested that policymakers did not see much need to trim rates further.

With Friday’s improved US jobs data, forex traders are likely to keep a close eye on the central bank’s 2020 outlook and beyond.

Elsewhere, the freshly appointed President Christine Lagarde will hold her first European Central Bank (ECB) meeting on Thursday.

The ECB is also expected not to make any major changes to its rates. But the fx market will be focusing on Lagarde’s view on policy outlook, the economy, and the upcoming strategy review.

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