Dollar Climbs to Month-High on Safety Flows Ahead of Fed Meeting



© Reuters.

By Peter Nurse

Investing.com – The dollar pushed higher in early European trade Monday, rallying to a  month-high on the back of safety flows given concerns about the health of Chinese property giant Evergrande and ahead of this week’s crucial Federal Reserve meeting.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 93.328, having earlier climbed to 93.356, its highest since Aug. 23.

fell 0.1% to 109.83, dropped 0.1% to 1.1715, falling to its lowest since late August, fell 0.3% 1.3706. The risk sensitive fell 0.4% to 0.7237, a three-week low, hit by the slump in iron ore prices, one of Australia’s key exports.

Worries about the financial health of Evergrande have hit equities, prompting risk-off sentiment within the foreign exchange market, to the benefit of the safe-haven dollar.

Evergrande is China’s second-largest property developer by sales, and has managed to rack up some $300 billion in debts. Doubts are growing over whether it will be able to make a bond interest payment of $83.5 million due on Thursday. A messy default could have wider implications on the Chinese economy at a time when growth is already looking fragile.

However, the main focus remains on the , with the U.S. central bank set to hold a two-day policy meeting this week, ending on Wednesday.

The Fed is widely expected to stick with broad plans for tapering this year but will hold off providing details or a timeline at this meeting. 

See also  Dollar Gains as Safe Haven; Yuan Retains Strength

That said, Friday’s U.S. consumer sentiment release showed improving confidence, while were surprisingly strong in August, implying an improving economy.

“The August job report pulled the rug from under most analysts/market participants betting on a firm September taper announcement,” said analysts at Nordea, in a note. “We are not certain that the Fed will dare to present a firm tapering plan on Wednesday, but we remain firm that they will have to take further steps toward becoming concrete on how and when [this week].”

The Fed isn’t the only central bank meeting this week, with the likes of the , the and the also scheduled to get together. But the main news could come from Scandinavia, with Norway’s Norges Bank expected to become the first central bank in western Europe to lift rates.

Elsewhere, rose 0.3% to 1.2810, with the oil-sensitive Canadian dollar hit by Monday’s fall in oil prices as well as political uncertainty ahead of an election where polling suggests incumbent Prime Minister Justin Trudeau will remain leader of a minority government.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

See also  Dollar Retains Strength as U.S. Economy Outperforms

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here