US Markets

FOREX-Dollar eases amid recovery in risk appetite with Fed meeting in focus

Credit: REUTERS/MOHAMED AZAKIR

The dollar was set to end the week close to where it started following a roller-coaster week in which currencies were tossed around by shifting risk appetite, with the market's focus now shifting to next week's U.S. Federal Reserve meeting.

By Kevin Buckland

TOKYO, July 23 (Reuters) - The dollar was set to end the week close to where it started following a roller-coaster week in which currencies were tossed around by shifting risk appetite, with the market's focus now shifting to next week's U.S. Federal Reserve meeting.

The dollar index =USD is on track to advance 0.1% for the week, having barely budged overnight to stand at 92.782 in Asia on Friday.

That was, however, off the 3-1/2-month high of 93.194 hit on Wednesday as strong Wall Street earnings helped investors regain some of the confidence lost to earlier worries the Delta variant of the coronavirus could derail the global recovery.

The safe-harbour yen JPY=EBS weakened less than 0.1% during the week to trade at 110.135.

Meanwhile, the euro EUR=EBS was 0.2% lower over the period at $1.1779 after the European Central Bank pledged to keep interest rates at record lows for even longer, as widely expected.

The uptrend in the dollar index is "showing tentative signs" of stalling around 93.0, "but its overall resilience regardless of the shifting risk mood and the ECB's shift to a more structurally dovish policy stance suggest retracements will likely be limited to the 91.5-92.0 zone," Westpac strategists wrote in a client note.

"The U.S. is better positioned than others to withstand the spread of the delta variant thanks to its earlier strong vaccination drive."

The British pound GBP=D3 recovered from losses as steep as 1.3% for the week to trade about 0.1% higher at $1.37755, buoyed by the recovery in risk sentiment even with COVID-19 cases broadly on the rise.

However, Australia's dollar AUD=D3 - often viewed as a proxy for risk appetite - was still headed for a 0.2% drop, which would be a fourth straight weekly decline.

With half the Australian population languishing under lockdown, economists speculate the country's central bank could increase stimulus rather than decreasing it at its next policy meeting.

"The balance of risks point to more weakness in AUD in the near term," Commonwealth Bank of Australia strategist Joseph Capurso wrote in a client note.

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

Currency bid prices at 0115 GMT

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=EBS

$1.1778

$1.1771

+0.07%

-3.59%

+1.1781

+1.1767

Dollar/Yen

JPY=EBS

110.1500

110.1750

+0.00%

+6.67%

+110.1550

+0.0000

Euro/Yen

EURJPY=EBS

129.73

129.65

+0.06%

+2.21%

+129.7500

+129.6300

Dollar/Swiss

CHF=EBS

0.9188

0.9192

-0.05%

+3.84%

+0.9192

+0.9187

Sterling/Dollar

GBP=D3

1.3770

1.3769

+0.02%

+0.81%

+1.3779

+1.3760

Dollar/Canadian

CAD=D3

1.2560

1.2555

+0.01%

-1.39%

+1.2566

+1.2552

Aussie/Dollar

AUD=D3

0.7382

0.7384

+0.01%

-4.00%

+0.7400

+0.7378

NZ Dollar/Dollar

NZD=D3

0.6982

0.6975

+0.12%

-2.76%

+0.6988

+0.6970

All spots FX=

Tokyo spots AFX=

Europe spots EFX=

Volatilities FXVOL=

Tokyo Forex market info from BOJ TKYFX

World FX rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Kevin Buckland; Editing by Sam Holmes)

((Kevin.Buckland@thomsonreuters.com;))

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

Latest US Markets Videos

Test Video TOPIC US market

Nov 24, 2021

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More