Dollar edges lower ahead of FOMC meeting
|The greenback ended lower against majority of its peers (except vs jpy) in thin trading conditions as investors remained cautious ahead of the upcoming Federal Reserve policy meeting on Wednesday.
Versus the Japanese yen, although price rebounded from 109.60 in New Zealand to 109.83 in thin Asian trading as China and HK markets remained closed, price retreated to 108.62 in European morning. However, price then rallied in tandem with U.S. yields to an intra-day high at 110.09 near New York close.
The single currency remained under pressure in New Zealand and retreated to 1.2095 in Asian morning. The pair then erased its losses and gained in European trading on cross-buying of euro especially vs sterling and rose to an intra-day high at 1.2130 in New York morning on usd's weakness.
The British pound traded sideways in Asia before tumbling to session lows at 1.4069 on renewed Brexit concerns. However, lack of follow-through selling triggered profit-taking and the pair staged a short-covering rebound to 1.4123 in New York morning due partly to usd's weakness.
Reuters reported Michel Barnier, the European Union's former Brexit negotiator, said on Monday that the reputation of the United Kingdom was at stake regarding tensions over Brexit. EU politicians have accused British Prime Minister Boris Johnson of not respecting engagements made regarding Brexit. Growing tensions between Britain and the EU threatened to overshadow the Group of Seven summit on Sunday, with London accusing France of "offensive" remarks that Northern Ireland was not part of the UK. "The United Kingdom needs to pay attention to its reputation," Barnier told France Info radio. "I want Mr Johnson to respect his signature," he added.
On the data front, Reuters detailed the euro zone industrial production was stronger than expected in April, driven by a more than doubling of durable consumer goods output from a year earlier as economies steadily reopened after COVID-19 pandemic lockdowns, data showed on Monday. The European Union's statistics office Eurostat said industrial output in the 19 countries sharing the euro rose 0.8% month-on-month for a 39.3% year-on-year surge. Economists polled by Reuters had expected a 0.4% monthly and a 37.4% annual jump.
Data to be released on Tuesday:
New Zealand Westpac consumer survey, food price index, GDT price index, Australia house price index, Japan tertiary industry activity, Germany CPI, HICP, UK claimant count, ILO unemployment rate, employment change, average weekly earnings, France CPI (EU norm), CPI, Italy CPI, CPI (EU norm), EU trade balance, Canada housing starts, and U.S. NY Fed manufacturing index, PPI, core PPI, retail sales, retail sales ex-autos, redbook, industrial production, capacity utilization, manufacturing output, business inventories, NAHB housing market index.
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