Euro is steady ahead of this week’s ECB policy meeting
By Polya Lesova and Sarah Turner, MarketWatch
LONDON (MarketWatch) — The U.S. dollar rose against most other major currencies on Tuesday, posting particularly sharp gains against the British pound after data indicated a further slowdown in U.K. manufacturing expansion.
The dollar index DXY +0.14% , which measures the performance of the greenback against a basket of six currencies, traded at 73.187, up from 73.053 in late North American trading Monday.
The pound GBPUSD -0.9071% dropped 1% to $1.6493 after a closely watched U.K. manufacturing purchasing managers index fell to a seven-month low in April.
In other trading, the euro EURUSD +0.0540% edged down to $1.4793, compared with $1.4819 in late North American trading. Traders are awaiting Thursday’s monetary-policy decision from the European Central Bank.
“We now see a June rate hike as likely, and if that is correct, it can be assumed that [ECB President Jean-Claude] Trichet will provide a signal to the market at this week’s policy meeting,” said Jane Foley, senior currency strategist at Rabobank International, in a note to clients.
The euro “is likely to react positively to any hawkish signal from the ECB on Thursday,” she wrote.
Currency strategists at Brown Brothers Harriman expect the greenback to lose ground in coming days. “Policy differences between the [Federal Reserve] and other central banks, and the resulting interest-rate differentials, have been a large factor in dollar weakness,” they said.
They noted that U.S. payrolls data should show 200,000 net new job additions, they said, explaining that “this adds up to a risk-positive/dollar-negative mix of data.”
The Australian dollar AUDUSD -0.4663% , which touched a 29-year high against the greenback on Monday, fell to $1.088 from $1.0933 in late North American trading Monday.
