US Interest Rates Hold Firm, Dollar Consolidates Against G10 Currencies
In a relatively quiet “Turn Around Tuesday” session, the US dollar is trading in a narrow range against most major currencies. The greenback’s recent strength has seen it hover around the JPY151 mark, its highest level since late July.
A Closer Look at the Markets
Yesterday’s bearish price action seems to have had a limited impact on the euro, sterling, and other major currencies. Despite some initial losses, these currencies have managed to regain some ground, with the euro recovering from a brief dip below $1.08. The sterling, too, has bounced back from its earlier losses, although it remains under pressure due to ongoing Brexit-related uncertainty.
Interest Rates Remain a Key Factor
The firmness of US interest rates continues to be a key factor in the dollar’s resilience. With the Federal Reserve showing no signs of easing its monetary policy stance, investors are likely to remain cautious in their approach to the currency markets. This could lead to further consolidation in the dollar’s value, particularly against the G10 currencies.
A Mixed Picture for the G10 Currencies
While the euro and sterling have shown some signs of recovery, other G10 currencies are struggling to gain traction. The Canadian dollar, for example, remains under pressure due to weaker-than-expected economic data. The Australian dollar, too, is facing headwinds, thanks to a decline in commodity prices.
What to Expect Next
As the day progresses, investors will be keeping a close eye on the US economic calendar, which includes the release of the ISM manufacturing index. A strong reading could provide a further boost to the dollar, while a weak reading could lead to some profit-taking. Either way, the dollar’s consolidation phase is likely to continue, at least in the short term.
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