The US dollar erased its early gains and extended its two-week losing skid on Monday. As investors braced for the Federal Reserveâs two-day policy meeting and read reports that China canceled trade talks with the US, the greenback dipped against a basket of currencies.
On Wednesday, the central bank will conclude its two-day Federal Open Market Committee (FOMC) meeting. The market widely anticipates that Fed Chair Jerome Powell and the Board of Governors will vote to raise interest rates by a quarter-point. Traders will comb through the statement and determine if the central bank is still likely to pull the trigger on a December rate hike.
The Fed may also examine the latest economic data. On Friday, filings for unemployment benefits decreased for the third consecutive week to a fresh 48-year low. The Federal Reserve Bank of Philadelphiaâs manufacturing index rebounded in September from its lowest level in two years. Home sales ended a streak of four straight monthly declines.
According to the CME Group FedWatch tool, there is a 94% chance of a September rate hike and an 80% chance of a December rate hike. With better-than-expected jobs numbers, a booming economy, and impressive wage growth, the central bank has all the evidence it needs to be hawkish on rates.
Over the weekend, Chinese officials canceled plans to meet with US officials in Washington later this week. Reports say that talks between Vice-Premier Liu He and Treasury Secretary Steven Mnuchin were called off, which comes as the White House introduced new tariffs on $200 billion in Chinese imports. This has analysts fearing that the US-China trade dispute is unlikely to end anytime soon and that further tariffs emanating both sides are inevitable.
The buck was largely unaffected by reports that US Deputy Attorney Generation Rod Rosenstein was on his way out. Reports suggested on Monday that he was either getting terminated by the White House or he is resigning. It was confirmed that Rosenstein will meet with President Donald Trump at the White House on Thursday to talk about the various reports.
The US Dollar Index, a measurement of a half-dozen currencies, was flat at 94.21.
The CAD/USD currency pair plummeted 0.23% to 0.7720, from an opening of 0.7738. The EUR/USD jumped 0.04% to 1.1754, from an opening of 1.1749.
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US Dollar Extends Losing Skid Ahead of Federal Reserve Policy Meeting
