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Dollar erases gains as markets brace for Fed meeting

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Investing.com -

Investing.com - The dollar erased gains against the other major currencies on Monday, as sentiment on the greenback became fragile ahead of the Federal Reserve's highly-anticipated policy meeting this week.

USD/JPY slipped 0.16% to 120.80.

Most investors expect the Fed to raise interest rates for the first time since June 2006 at its upcoming meeting on December 15-16.

Higher interest rates would make the U.S. dollar more attractive to yield-seeking investors.

EUR/USD rose 0.25% to 1.1021.

Data earlier showed that euro zone industrial production rose 0.6% in October, beating expectations for a 0.3% gain, after a 0.3% fall the previous month.

Elsewhere, the dollar remained higher against the pound, with GBP/USD down 0.51% at 1.5139 but was lower against the Swiss franc, with USD/CHF edging down 0.16% to 0.9812.

The Australian and New Zealand dollars were stronger, with AUD/USD up 0.91% at 0.7254 and with NZD/USD gaining 0.86% to 0.6772.

Also Monday, China's yuan opened at fresh four-and-a-half year lows after the People's Bank of China set its yuan midpoint rate at the lowest level since 2011.

The move came after the PBOC indicated Friday that it may ease its loose peg to the dollar and allow the yuan track a broad basket of currencies of China's trading partners.

Such a move would reduce China's demand for dollars.

Meanwhile, USD/CAD fell 0.16% to trade at 1.3732, but still remained within close distance of an 11-1/2 year high of 1.3782 hit earlier in the day.

The commodity-related loonie remained under pressure after oil prices fell to the lowest levels since February 2009 earlier Monday, as ongoing worries over a global supply glut continued to weigh.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.09% at 97.52, after rising to 97.99 earlier in the session.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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