29.07.2019: USD trading steadily in run-up to FOMC meeting (USDХ, JPY, AUD)


The US dollar settled at a two-month high against a basket of currencies. Better-than-expected preliminary US GDP data inspired dollar bulls ahead of a policy decision on the FRS. The Asian trade opened on a quiet note. This trading week, market sentiment will depend on geopolitical developments in the Middle East, a policy meeting of the US central bank, and the following press conference of Jerome Powell. Market participants are revising their expectations of how far the Fed will go in monetary easing. Last week, the ECB put interest rates on hold. At the end of the trading week, the eurozone presented a series of decent macroeconomic data. Now the Federal Reserve is widely expected to lower the official funds rate by 25 basis points. In mid-July, traders predicted the scenario of a deeper rate cut of 50 basis points. The US dollar index is hovering at the level slightly above 98 points in the Asian trade. Besides, central banks of Japan and the UK are also going to review monetary policy in the nearest days. Traders are anticipating a new round of the trade talks between the US and China which will kick off today. The dollar/yen pair slipped 0.2% after it had hit a two-week high on Friday due to month-end selling by Japanese exporters. Now the dollar/yen pair is trading at 108.61. The market expects a soft policy statement from the Bank of Japan on Monday. The regulator could signal its readiness for monetary easing, but it will hardly venture into this move in the short term. The Australian dollar slumped and almost approached the level of 0.68. Apart from the greenback’s advance, the aussie dollar has been weighed down by the dovish rhetoric of the Reserve Bank of Australia. Its leader Philip Lowe assured the market that interest rates would decrease in the medium term. Robust monetary stimulus is still needed in Australia to prop up economic growth and lower unemployment rates. The AUD/USD pair is likely to break the level of 0.69. Today the pair halted its decline trading at 0.6908.

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