The dollar was little changed on Monday, a day before the Federal Reserve was due to begin a two-day policy meeting, while the euro was boosted by unexpectedly high inflation data before the European Central Bank meets on Thursday.
The U.S. central bank is widely expected to hike interest rates by an additional 25 basis points this week, and investors will be watching for any new indications on how many more rate increases are likely.
Fed Chair Jerome Powell is in a “difficult position” because “they’re going to raise rates 25 basis points and yet he’s going to have to argue against the easing of financial conditions,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
Fed funds futures traders are pricing for the Fed’s benchmark rate to peak at 4.93% in June, up from 4.33% now, and then for the central bank to cut it to 4.52% by December. This contrasts with comments from Fed officials, who have said that they will need to keep rates in restrictive territory for a period of time in order to bring down inflation.
This report’s information was first seen on REUTERS; to read more, click this link.
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