Investing.com – The dollar remained steady near highs of two weeks against a basket of currencies on Monday before the meeting of the u.s. Federal Reserve, which could signal a rate cut later this year, while the outlook for global growth will falter in the face of escalating trade tensions.
While the u.s. central bank should refrain Wednesday to reduce its interest rates, some investors are betting that the Fed chairman Jerome Powell, could take advantage of the meeting to prepare the ground for cuts later in the year.
The dollar index against a basket of six major currencies was little changed at 97,058 11: 00, after having climbed to 97,580 Friday, its highest level since June 3.
“As Powell does not exclude rate cuts in the short term, the dollar will remain heavy after the Fed meeting,” said Masafumi Yamamoto, a strategist-in-chief of foreign exchange at Mizuho Securities.
The escalation of the trade war between the United States and China has impacted the global supply chains, hitting hardest the business investment, industrial production and global growth.
“In addition to upbeat data for the u.s., the dollar is supported by the weakness of other currencies, including the euro and the antipodes,” said Junichi Ishikawa, a strategist-in-chief of forex trading at IG Securities in Tokyo.
“The Fed could cut rates sooner or later, but his counterparts in the antipodes and of the ECB may also, and of such points of view give the advantage to the dollar”.
Later Monday, the office of the u.s. representative for trade to begin seven days of testimony from u.s. companies on the project of president Donald Trump to apply customs duties on $ 300 billion of chinese products.
Some traders look at these hearings, because of complaints from u.s. companies, which bear the cost of customs duties on the goods they import, would encourage Trump to delay rate increases further.
The euro was little changed Monday to 1,1210 after having lost about 0.6% on Friday. It fell to a low of eight days of 1,1203.
The australian dollar was 0,6872, just above a trough of 0,6862 dollar established since Friday for five months, when the currency has declined by nearly 0.7%.
The new zealand dollar, which has fallen more than 1% in the previous session, was almost at its lowest level in three weeks 0,6509.
The dollar was stable at 108,57 yen, after a slight increase of 0.15% on Friday.
–Reuters contributed to this report