Economy

Dollar stalls ahead of Fed meeting as rate move eyed

Dollar stalls ahead of Fed meeting as rate move eyed”

The U.S. dollar gained slightly against its major rivals in late trading on Monday as market participants await a key meeting of the Federal Reserve.

"There is a realization the market had not fully priced the increased chances of a no-deal Brexit", said Claire Dissaux, head of global economics and strategy at Millenium Global Investments.

A stronger-than-expected USA gross domestic product report on Friday led some investors to doubt whether the Fed will continue easing this year after its Wednesday meeting.

Meanwhile, looking past the Fed meeting, the other major catalyst for USD exchange rates this week will be the publication of the US non-farm payrolls at the end of the session, with an expected slowdown in employment growth likely to dent the US Dollar.

It will announce its decision on whether to adjust interest rates Wednesday afternoon.

The euro was 0.1% lower at $1.111.

"Apple's results will be a good read into trade and the situation with China and if Apple has a good number it would be a stabilizing force for the technology sector", said Craig Hodges, portfolio manager with Hodges Funds in Dallas, Texas.

Because of this the Fed is expected to signal that this month's cut will be "one and done", much to the relief of Dollars investors. The Dow Jones Industrial Average .DJI fell 23.33 points, or 0.09%, to 27,198.02, the S&P 500 .SPX lost 7.79 points, or 0.26%, to 3,013.18 and the Nasdaq Composite .IXIC dropped 19.72 points, or 0.24%, to 8,273.61.

MSCI's All Country World Index of stocks, down by as much as 0.2% on the day, erased some losses to trade 0.05% lower.

The pan-European STOXX 600 index earlier rose 0.03%.

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US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese Vice Premier Liu He for talks in Shanghai starting on Tuesday, their first face-to-face meeting since US President Donald Trump and Chinese President Xi Jinping agreed to revive talks late last month. "The euro zone data has been weak of late so if coming United States data such as payrolls figures are strong, the dollar could gain despite a Fed rate cut", said Shinichiro Kadota, senior strategist at Barclays.

"The Fed is most likely going to cut rates by 25bp (basis points)".

Also drawing some attention were U.S.

Oil futures zigzagged in and out of positive territory, whipsawed by Fed expectations and the reaction to talks between Iran and some signatories of its nuclear agreement over the weekend.

The 1.11 level underneath is massive support, so if we were to turn around and break down through there it would of course be a negative sign, perhaps opening up the door to the 1.10 level after that.

The Swiss franc has stabilised after its recent run to two-year highs and was last up 0.1% at 1.1038 versus the euro.

Prices slipped as pessimism over tomorrow's in-person US-China trade talks in Shanghai and slower global economic growth meant the demand for crude oil could slide.

Benchmark 10-year notes last rose 9/32 in price to yield 2.0511%, from 2.081% late on Friday.

The 30-year bond last rose 10/32 in price to yield 2.5871%, from 2.601% late on Friday.

Spot gold was flat at $1,418.00 per ounce. USA gold futures gained 0.16% to $1,421.50 an ounce.



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