MW: Dollar, euro battle to standstill ahead of ECB
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar was little changed versus most major rivals Tuesday as investors looked ahead to meetings of the European Central Bank and Bank of England and the release of U.S. June nonfarm payrolls data later in the week.
The ICE dollar index DXY +0.16% , which tracks the U.S. unit against a basket of six major rivals, traded at 81.888, little changed from its level in late North American trading on Monday.
The euro EURUSD -0.01% edged down to $1.2574 from $1.2583. The British pound GBPUSD -0.07% traded at $1.5670, from $1.5690.
Overall activity was also curtailed amid thin conditions ahead of Wednesday’s U.S. Independence Day holiday, strategists said.
But the overall focus remains on U.S. data, particularly after the closely watched Institute for Supply Management gauge of June U.S. manufacturing activity unexpectedly slipped below the 50% level on Monday, strategists said.
“The U.S. data yesterday reminds the market that while most of the focus remains on Europe, the U.S. economy continues to slide and if this carries on it could clearly counterbalance any of the positive market vibes that came from the recent EU summit,” said Steven Barrow, currency strategist at Standard Bank. “This is one reason why we feel that any summit bounce will be short-lived and have not changed our call for euro/dollar to slide to $1.15 this year.”
The Australian dollar AUDUSD +0.08% fetched $1.0259, little changed from $1.0253 in late trading on Monday, after the Reserve Bank of Australia left its key lending rate unchanged.
Economists expected no change from the RBA as the central bank cut its cash rate by 75 basis points over its past two meetings to bring the rate down to 3.5%. Read about Australia rate decision.
The European Central Bank and the Bank of England are set to announce interest-rate decisions on Thursday, with the ECB expected to deliver a rate cut.
“With inflation readings falling and the real economy slowing in the euro zone, it seems the macro backdrop supports easing by the ECB,” said strategists at Brown Brothers Harriman.
“With the Bank of England forecasting a further decline in inflation, the BoE has further scope to pursue further quantitative easing. In fact, we expect them to announce another £50 billion ($78.5 billion) of quantitative easing via gilt purchases on Thursday,” said strategists at BNP Paribas.
Against the Japanese currency, the dollar USDJPY +0.42% bought 79.71 yen, up from ÂĄ79.48.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Sarah Turner is MarketWatch's bureau chief in Sydney.
