NEW YORK, Sept 19 (Reuters) – The dollar appreciated against major currencies on Monday, trading in narrow ranges, ahead of a series of central bank meetings this week led by the Federal Reserve, which is expected to increase the additional 75% interest rate. dots (bps).
Volume was light overall, with the London and Tokyo markets closed for public holidays.
Global equity markets remained nervous, however, and the dollar maintained its firm tone, given expectations that the Fed would maintain its aggressive tightening path into next year to contain stubbornly high inflation.
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Fed funds futures have priced in an 81% chance of a 75 basis point rate hike this week and a 19% chance of a 100 rise following the two-day policy meeting. U.S. central bank days, according to Refinitiv data
The dollar index, which measures the currency against six peers, rose 0.1% to 109.62, not far from the 20-year high of 110.79 hit on September 7.
Year-to-date, the dollar index has jumped 14.7%, on track for its best annual percentage gain in 38 years.
“Generally, the trend is your friend until the turn at the end. The dollar is going to follow that pretty well,” said Amo Sahota, executive director of FX advisory firm Klarity FX in San Francisco.
“Will there be more dollar strength ahead of the FOMC (Federal Open Market Committee)? I think the market will pull a bit here. It will go into a waiting pattern and some consolidation,” he said. -he adds.
This week is also littered with holidays that could reduce liquidity and lead to bigger price moves, with Japan and Britain off Monday, Australia on Thursday and Japan back on Friday, among others.
In other currencies, the euro was little changed against the dollar at $1.0021, the pound slid 0.1% to $1.1424 and in view of Friday’s 37-year low at 1.13510 $, while New Zealand fell 0.6% to US$0.5958.
Earlier in the session, the New Zealand unit fell to its lowest level since May 2020 at US$0.5933.
The Canadian dollar fell to its lowest level in nearly two years at C$1.3354 per US dollar. The US dollar last changed hands at $1.3258, unchanged on the day.
Against the yen, the dollar rose 0.2% to $143.18, sitting below a strong resistance level at 145 which was bolstered by tougher talk from Japanese policymakers on monetary intervention.
The Bank of Japan is expected to stick with massive stimulus at its Wednesday-Thursday meeting, keeping its ultra-loose policy in place. But a turning point in Japanese monetary policy could come sooner than previously thought, with the central bank recently dropping the word “temporary” from its description of high inflation. Read more
The Chinese yuan ended Monday at a fresh 26-month low and traded below the psychologically critical 7 to the dollar level. In offshore trading, the yuan weakened 0.35 .
Bitcoin, the largest cryptocurrency by market value, fell to a three-month low below $19,000 as unease over rising interest rates globally hit assets at risk. More It was last down 0.2% at $19,381.
Ether, the cryptocurrency used in the Ethereum blockchain, rebounded from a two-month low against the dollar and was last up 1.4% at $1,358.60.
Ethereum underwent a major software update last week that changes the way ether tokens are created, significantly reducing its power consumption. Read more
(This story corrects to show the dollar is on track in 2022 to post its biggest annual percentage gain in 38 years, not 18 in the 6th paragraph)
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Currency prices at 3:19 p.m. (7:19 p.m. GMT)
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Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Dhara Ranasinghe in London and Kevin Buckland in Tokyo; Editing by Bradley Perrett, Frank Jack Daniel, Paul Simao and Marguerita Choy
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