FOREX-Dollar eases amid rebounding risk appetite with Fed meeting in focus
Band Kevin Buckland
TOKYO, July 23 (Reuters) – The dollar was expected to end the week near where it started after a week of roller coasters in which currencies were tossed about by a change in risk appetite, with the market now focusing on the Federal Reserve meeting American next week.
The dollar index = USD is on track to advance 0.1% for the week, having barely moved overnight to settle at 92.782 in Asia on Friday.
It was, however, off the 3.5-month high of 93.194 reached on Wednesday, as strong Wall Street earnings helped investors regain some of the confidence lost by earlier fears that the Delta variant of the coronavirus would do. derail the global recovery.
The refuge yen JPY = EBS weakened by less than 0.1% on the week to trade at 110.135.
Meanwhile, the euro EUR = EBS was 0.2% lower during the period at $ 1.1779 after the European Central Bank pledged to keep interest rates at record highs for even longer, as widely expected.
The dollar index’s uptrend “shows tentative signs” of stagnating around 93.0, but its overall resilience regardless of the changing risk mood and the ECB’s shift to a more structurally accommodative policy suggest that retracements will likely be limited to the 91.5-92.0 zone, âWestpac strategists wrote in a customer note.
“The United States is in a better position than others to resist the spread of the delta variant thanks to its previous strong vaccination campaign.”
The pound GBP = D3 recovered from losses as large as 1.3% for the week to trade about 0.1% higher at $ 1.37755, supported by the resumption of risk sentiment even with cases of COVID-19 widely in rise.
However, the Australian dollar AUD = D3 – often seen as an indicator of risk appetite – was still heading for a decline of 0.2%, which would be a fourth consecutive weekly decline.
With half of Australia’s population languishing under lockdown, economists are speculating that the country’s central bank may increase stimulus rather than cut it at its next policy meeting.
“The balance of risks points to greater short-term AUD weakness,” Commonwealth Bank of Australia strategist Joseph Capurso wrote in a client note.
Currency bid price at 0115 GMT
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(Reporting by Kevin Buckland; Editing by Sam Holmes)
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