The US dollar strengthens against the euro, yen and pound sterling in trading on Monday.
The market is waiting for the meeting of the Federal Reserve System (Fed), which will be held on November 1-2. Traders are confident that the US Central Bank will raise the base interest rate by 75 basis points (bp) following the results of the fourth meeting in a row. As a result, the rate will reach the level of 3.75-4% – the maximum since December 2007.
Traders will be closely watching Fed Chairman Jerome Powell’s statements to see if the US central bank intends to slow down the pace of policy tightening from December, writes the Financial Times newspaper. The global economy is weakening, and experts are already seeing signs that the peak of inflation in the United States has passed. In this regard, investors are increasingly expressing fears that the Fed may overdo it with raising rates and provoke an excessive recession in the economy.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), adds 0.08% on Monday, the broader WSJ Dollar – 0.19%.
The euro/dollar pair is trading at $0.9946 as of 8:55 am KSK, compared to $0.9966 at market close on Friday.
The US dollar against the yen rose to 147.92 yen against 147.48 yen in the previous session.
The pound dropped to $1.1592 from $1.1617 on Friday.
The Bank of England is also holding a meeting this week, its results will be made public on 3 November. Experts expect the British Central Bank to raise the base rate by 75 bp. – until 3%. The Bank of England did not raise the rate by more than 50 bp. since 1989, notes FT.
The dollar against the yuan edged up to 7.2698 yuan from 7.2525 yuan at market close on Friday amid weak economic data from China.
The Purchasing Managers’ Index (PMI) for China’s manufacturing industry fell to its lowest level since July of 49.2 in October from 50.1 a month earlier, according to data from the National Bureau of Statistics of the People’s Republic of China (GSO). An index value below 50 points indicates a decline in activity in the sector.
PMI services in China in October fell to 48.7 points, dropping below 50 points for the first time since May.
