Mount­ing U.S. rate cut bets cap dol­lar be­fore G20 meet­ing

The Guardian (Charlottetown) - - BUSINESS -

LONDON (Reuters) — The dol­lar stead­ied above a re­cent two-and-a-half-month low on Tues­day as in­vestors fo­cused on a Group of 20 sum­mit later this month where Beijing and Washington might make some progress on trade talks.

A 3.5% rally in the dol­lar against its ri­vals in the first five months of 2019 has come to a halt in re­cent weeks as dovish com­ments from Fed­eral Re­serve of­fi­cials and weak eco­nomic data bolster rate-cut ex­pec­ta­tions. Though mar­kets are only pric­ing in about a 20% chance of a rate cut in June, they are fully pric­ing in a cut by July, and more than three rate hikes by mid-2020. The next pol­icy meet­ing is sched­uled for next week. Ris­ing rate cut bets have also prompted in­vestors to in­crease hold­ings of other cur­ren­cies, with lat­est po­si­tion­ing data show­ing the big­gest weekly rise in euro po­si­tions in nine months. With the dol­lar hav­ing weak­ened 1% this month against a bas­ket of other ma­jor cur­ren­cies to hit a late-March low of 96.46 last week, in­vestors are firmly fo­cused on a G20 meet­ing in Osaka, Japan, on June 28-29.

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