U.S. dollar range-bound ahead of Thursday’s ECB meeting

The U.S. dollar eased marginally against its main rivals Tuesday, but the greenback held to a tight range as investors refrained from making large bets ahead of a meeting of European Central Bank policy makers.

“In what is justly called a disinteresting week for U.S. economic data, it seems destined that exogenous influences will be the catalysts for USD-pairs, and central banks other than the Federal Reserve will be responsible for supporting risk appetite,” said Christopher Vecchio, a currency analyst at DailyFX.

Investors expect ECB President Mario Draghi to provide more concrete guidance about the central bank’s intentions regarding a possible expansion of its program of quantitative easing during a news conference after Thursday’s meeting.

Draghi hinted about a possible increase in stimulus after the ECB’s September meeting, citing the risks of persistently low inflation and tepid growth.

The central bank’s program of asset purchases currently involves buying €60 billion ($78 billion) a month in public and private securities.

The euro EURUSD, +0.0176% rose to $1.1340 from $1.1321 late Monday in New York.

The ICE U.S. Dollar Index DXY, -0.07% a measure of the dollar against a basket of six rival currencies, was mostly flat at 94.90.

The dollar USDJPY, +0.00% traded at ¥119.92, up from ¥119.50 late Monday.

Meanwhile, Canada’s Liberal Party won a nationwide election on Monday. The election led to the ouster of Stephen Harper, a three-term prime minister and leader. His successor is Justin Trudeau, the son of former Prime Minister Pierre Trudeau.

Trudeau’s surprise majority helped support the loonie CADUSD, -0.0616% and pushed the yield on Canada’s 10-year sovereign bond higher.

“The decisive outcome has undercut fears of inconclusive election results,” said a team of currency analysts at Société Générale. “With the election out of the way, near-term CAD direction will continue to be influenced by crude oil prices.”

Boris Schlossberg, managing director of FX strategy at BK Asset Management, expects the dollar-loonie pair to test multiyear highs at C$1.35 in the coming months as currency traders adjust to the transition in power in Ottawa.

The Bank of Canada is scheduled to hold its policy meeting on Wednesday, where it is expected to keep interest rates unchanged.




Comments are closed.