Dollar firm as Fed meeting and growth risks dominate

By Tom Westbrook

SINGAPORE – The greenback was on a agency footing on Monday, as merchants brace for a pointy U.S. rate of interest hike this week and search for security as knowledge factors to a weakening world economic system.

The buck was up barely in opposition to most majors early within the Asia session, buying and selling at $1.0195 on the euro and steadying Friday losses to purchase 136.57 Japanese yen.

The U.S. Federal Reserve concludes a two-day assembly on Wednesday and markets are priced for a 75-basis-point (bp) charge hike, with a couple of 9% probability of a 100 bp hike.

“Market response will activate how hawkish Chair (Jerome)Powell sounds together with his willpower to cut back inflation within the face of slowing progress,” mentioned Nationwide Australia Financial institution foreign money strategist Rodrigo Catril.

U.S. progress knowledge can also be due out Thursday, although markets have already been rattled by a slew of soppy enterprise indicators in Europe, which snuffed out a rally in threat property on Friday.

An vitality disaster additionally hangs over the euro, whereas the trade-sensitive Australian and New Zealand dollars, which made one-month highs on Friday, have backed away.

The Aussie edged about 0.5% decrease to $0.6892 and the kiwi was down by the identical margin to $0.6223. [AUD/]

Australian client value knowledge is due on Wednesday and a scorching quantity may lend assist by ramping up bets on charge hikes, although analysts warned the backdrop was largely destructive.

“The Australian greenback will primarily be a perform of the world financial outlook,” mentioned Commonwealth Financial institution of Australia’s head of worldwide economics, Joe Capurso.

“The darkening outlook suggests the Aussie has extra draw back than upside threat and might check $0.6800 this week.”

Sterling additionally slipped on Monday, whilst markets reckon on a 60% probability the Financial institution of England would carry charges by 50 bp subsequent week. It was final down 0.3% to $1.1970.

Bitcoin hovered at $22.278. The greenback rose 0.4% to purchase 0.9641 Swiss francs. The U.S. greenback index sat at 106.840, slightly below a two-decade excessive made in mid July at 109.290.