US Markets

Dollar firms, ECB meeting in focus

Credit: REUTERS/MOHAMED ABD EL GHANY

The U.S. dollar firmed against the euro on Tuesday but held in its tight recent range before the European Central Bank on Thursday is expected to cut interest rates deeper into negative territory and possibly restart asset purchases.

By Karen Brettell

NEW YORK, Sept 10 (Reuters) - The U.S. dollar firmed against the euro on Tuesday but held in its tight recent range before the European Central Bank on Thursday is expected to cut interest rates deeper into negative territory and possibly restart asset purchases.

Investors are weighing whether further monetary stimulus will be effective in countering economic weakness in the euro zone, and whether the ECB will disappoint dovish expectations baked into the market.

“People are waiting on the ECB, that’s really the big event this week,” said Erik Nelson, a currency strategist at Wells Fargo in New York. But, “given some of the pushback we’ve seen from the hawks on the board, we could easily see a disappointing outcome.”

ECB policymakers are leaning toward a stimulus package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side effects of negative rates, five sources familiar with the discussion said last week.

Many also favor restarting asset buys, but opposition from some northern European countries is complicating this issue.

The dollar was last up 0.07% against the single currency EUR= at $1.1038. It has traded in a tight range between $1.1014 and $1.1084 for four days.

The euro got a temporary boost on Monday on a Reuters report that Germany is considering the creation of a "shadow budget" that would enable Berlin to boost public investment beyond the restrictions of constitutionally enshrined debt rules.

Germany can counter a possible economic crisis by injecting "many, many billions of euros" into the economy, Finance Minister Olaf Scholz said on Tuesday, signaling his readiness for a big stimulus package if the economy tips into recession.

The Japanese yen JPY= weakened to its lowest level against the greenback since Aug. 2 after Reuters reported that Bank of Japan policymakers are more open to discussing the possibility of expanding stimulus at their board meeting on Sept. 18-19 as the fallout from the U.S.-China trade war spreads.

Demand for the safe-haven currency has also dropped since China and the United States on Thursday agreed to hold high-level talks in early October, boosting risk sentiment.

In the United States, consumer price inflation data on Thursday and retail sales data on Friday are the main economic focus. They will follow a jobs report on Friday that showed U.S. jobs growth slowed more than expected in August.

The Federal Reserve is expected to cut rates when it meets on Sept. 17-18.

========================================================

Currency bid prices at 9:53AM (1353 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1038

$1.1046

-0.07%

-3.76%

+1.1059

+1.1033

Dollar/Yen

JPY=

107.2400

107.2300

+0.01%

-2.74%

+107.4900

+107.1900

Euro/Yen

EURJPY=

118.38

118.46

-0.07%

-6.21%

+118.7600

+118.3700

Dollar/Swiss

CHF=

0.9904

0.9919

-0.15%

+0.92%

+0.9931

+0.9897

Sterling/Dollar

GBP=

1.2371

1.2345

+0.21%

-3.03%

+1.2375

+1.2308

Dollar/Canadian

CAD=

1.3175

1.3166

+0.07%

-3.39%

+1.3191

+1.3160

Australian/Dollar

AUD=

0.6850

0.6861

-0.16%

-2.82%

+0.6869

+0.6850

Euro/Swiss

EURCHF=

1.0933

1.0957

-0.22%

-2.85%

+1.0969

+1.0928

Euro/Sterling

EURGBP=

0.8920

0.8946

-0.29%

-0.71%

+0.8974

+0.8922

NZ Dollar/Dollar

NZD=

0.6408

0.6422

-0.22%

-4.60%

+0.6441

+0.6411

Dollar/Norway

NOK=

8.9573

8.9242

+0.37%

+3.69%

+8.9869

+8.9214

Euro/Norway

EURNOK=

9.8877

9.8593

+0.29%

-0.18%

+9.9204

+9.8520

Dollar/Sweden

SEK=

9.7110

9.6571

+0.46%

+8.34%

+9.7580

+9.6544

Euro/Sweden

EURSEK=

10.7191

10.6695

+0.46%

+4.43%

+10.7737

+10.6656

( Reporting by Karen Brettell; editing by Jonathan Oatis)

((Karen.Brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net))

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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