Dollar gains on speculation Fed will begin tapering soon
|The greenback bounced off of a one-month low and ended the day higher against its peers as comments from Federal Reserve Chairman J. Powell on Friday continued to stoke speculation that the central bank would begin to taper its asset purchases soon.
Versus the Japanese yen, dollar found renewed buying at 113.47 in Australia and rebounded to 113.82 in Asian morning. Despite retreating to 113.52 at European open, the pair then gained to session highs at 113.92 at New York open on broad-based strength in usd before weakening to 113.60 on profit-taking and then traded sideways.
The single currency traded with a firm bias in Asia and gained to session highs at 1.1665 ahead of European open. The pair then met renewed selling there and tumbled in European session as the Bundesbank monthly report triggered broad-based selling in euro to session lows at 1.1591 at New York open due partly to usd's strength. Later, the pair staged a short-covering rebound to 1.1616 in New York morning.
Reuters reported German economic growth is likely to slow sharply in the fourth quarter of the year as industry continues to suffer from supply shortages and demand for services wanes, the Bundesbank said in a regular monthly report on Monday.
Europe's biggest economy boomed over the summer but unexpected supply-chain bottlenecks are now holding back its vast car manufacturing sector, while higher energy costs and persistent concerns over the coronavirus pandemic could hit consumer sentiment, economists have said. "Growth is likely to slow significantly in the current quarter," the Bundesbank said, adding that full-year growth is now likely to be "significantly" below its 3.7% prediction made in June.
The British pound found renewed buying at 1.3750 in Australia and gained to session highs at 1.3791 in European morning due partly to cross-buying of sterling especially vs euro. However, cable then erased its gains and fell to an intra-day low at 1.3742 at New York open on usd's broad-based strength before staging a short-covering rebound to 1.3797.
Data to be released on Tuesday:
U.S. building permits, redbook, monthly home price, consumer confidence, new home sales and Richmond Fed manufacturing
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