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