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The dollar is 'teetering' near its recent lows

The dollar is 'teetering' near its recent lows”

Such a move would be part of a global reversal of cheap money policy.

The New Zealand dollar fell against a broadly stronger U.S. dollar ahead of the Federal Reserve's two-day policy meeting which may provide hints to how and when the central bank will begin unwinding its massive balance sheet.

There was relief the weekend passed with no new provocation by North Korea, though Pyongyang's nuclear ambitions will be center stage when President Donald Trump addresses world leaders at the United Nations on Tuesday.

Sterling, which was also lifted across the board last week by a shift in expectations for interest rate rises, hit a 14-month high in early European trade before dipping back below $1.36 GBP=D3 by 0730 GMT.

Yet persistently subdued inflation despite a pick-up in global growth remains the "trillion dollar" question for central banks looking to normalise policy, a report from Bank for International Settlements said on Sunday.

Last week was the greenback's best against the yen since November, up 2.8 percent, as a rise in US yields bolstered its appeal against the low-yielding yen and data showing a pickup in USA consumer prices helped kindle expectations that the Fed could hike rates again in December.

"The primary reason USA yields are creeping up is after thinking about it clearly the market has decided that the Fed is unlikely to change the December 2017 dot - still saying they expect one more rate hike in 2017", BMO's Anderson said.

"When you press investors on the why, the standard reply is the lack of inflationary pressures".

Yields on US 10-year Treasuries did jump a hefty 14 basis points last week, and still trailed the United Kingdom where yields on 10-year paper surged 30 basis points.

But although the dollar has since risen sharply versus the yen, against a basket of major currencies it gained only half a percent last week.

Elsewhere, EUR/USD added 0.14% to 1.1956, while GBP/USD slid 0.25% to trade at 1.3560, just off a fresh 15-month peak of 1.3619 hit overnight.

Sterling touched its highest since the Brexit vote on Monday after notching its best week in nearly nine years against a currency basket.

The Bank of Japan meets this week, although it is widely expected to maintain its massive asset buying campaign at a meeting on Thursday.

In Japan, Prime Minister Shinzo Abe was said to be considering calling a snap election for as early as next month to take advantage of his improved approval ratings.

Investors will be keeping a close eye on a speech by BOE Governor Mark Carney later on Monday.

The seismic shift in rates saw sterling hit its highest since the Brexit vote and notch its best week in nearly nine years against a currency basket.

Talk of monetary tightening and a bounce in the dollar put gold on the defensive.

USA gold futures for December delivery fell 0.5 percent to $1,319 an ounce.

Trading was expected to be quiet on Monday with no major US economic reports to be released throughout the day.



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