MW:Dollar inches higher ahead of ECB, BoE meetings
By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar inched higher against the euro and the British pound Thursday, getting a lift ahead of an expected interest-rate cut by the European Central Bank and more stimulus from the Bank of England at their respective policy meetings later in the day.
The ICE dollar index DXY -0.07% , which measures the greenback against a basket of six currencies, reached 82.161, from 82.132 in late North American trading on Wednesday.
The European Central Bank and the Bank of England are due to announce interest rate decisions on Thursday.
Economists widely expect the ECB to cut its key rate from 1% in order to try and support the ailing euro zone economy.
“While we acknowledge that the magnitude of the policy response is uncertain (50 basis points versus 25 basis points), we strongly expect policy rates to be lowered,” said strategists at RBC Capital,
“In the current environment, the central bank’s playing its part in crisis resolution may well be seen as positive, particularly for the financial sector,” they added.
The euro EURUSD -0.0161% traded at $1.2529, just down from $1.2534 in late trading the previous day.
Meanwhile, economists widely expect the Bank of England to boost the size of its quantitative-easing program by another 50 billion pounds ($78.3 billion), bringing it to ÂŁ375 billion. Read central bank rate preview story.
The British pound GBPUSD +0.0573% reached $1.5593, from $1.5606 in late North American trading Wednesday.
Against the Japanese yen USDJPY -0.1667% , the dollar bought 79.78 yen, from ÂĄ79.84 in late North American on Wednesday.
“Bank of Japan Governor Masaaki Shirakawa... reiterated the upbeat assessment that exports and factory output are picking up as companies increase capital expenditure, suggesting the BoJ sees little need to deliver additional monetary stimulus at next week’s BoJ meeting,” said the RBC strategists.
The Australian dollar AUDUSD -0.1624% , meanwhile, reached $1.0256, from $1.0283 in late trading the previous session. Data out Thursday showed that the country’s trade deficit widened in May but by less than economists had been expecting. Read more on Australian trade deficit.
Sarah Turner is MarketWatch's bureau chief in Sydney.
