Dollar dips ahead of key central bank meetings

6 Jun 2024 , 09:52 AM

The euro slightly strengthened on Thursday in anticipation of a European Central Bank (ECB) policy announcement, where traders saw a rate decrease as all but guaranteed. Meanwhile, the dollar declined as fresh wagers on an anticipated easing cycle by the U.S. Federal Reserve this year were placed.

The Bank of Canada became the first G7 nation to lower its main policy interest rate, as was widely anticipated, and the Canadian currency modestly strengthened, recovering some of its losses from the previous session. The last price per dollar was C$1.3687.

With traders anticipating the ECB meeting later in the global day for clues on the bank’s rate stance, the euro rose 0.07% to $1.0876.

Although decision-makers have indicated that they want to reduce borrowing costs this month, they have not disclosed when further reductions may occur.

The weakening labour market circumstances in the US contributed to the weakening of the US currency in the global market and strengthened the argument for this year’s Fed rate decreases.

This year, the markets have factored in approximately 50 basis points of Fed rate decreases; the first is anticipated to occur in September.

The U.S. services sector resumed growth in May, according to data released on Wednesday, following a brief contraction in April. However, the survey’s specifics indicated that employment was still in contraction zone.

The New Zealand Dollar hit a three-month high of $0.6201 against the US dollar, while the Australian Dollar gained 0.25% to $0.6664 and the sterling increased by 0.09% to $1.2800.

At 104.10, the dollar index decreased by 0.14%.

Regaining some of the ground lost in the previous session, the yen gained 0.4% to hit 155.50 per dollar.

Earlier in the week, the Japanese yen saw a brief increase as investors withdrew from yen-funded carry trades due to political unrest that caused turbulence in emerging markets.

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