Title: Dollar Weakens, But Potential Rebound Expected Ahead of Fed Meeting
By Karen Brettell
NEW YORK, July 17 (Reuters) – The US dollar experienced a decline against a basket of currencies on Monday following its largest weekly drop of the year last week, mainly due to falling Treasury yields. However, it managed to stay above the one-year lows reached on Friday, lacking any major market drivers.
This week, market analysts anticipate the dollar to regain strength as investors await the upcoming Federal Reserve meeting scheduled for next week. The central bank is expected to implement another 25 basis points rate hike, resulting in a positive impact on the dollar.
While last week’s decline in the dollar was significant, Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, believes that the market should stabilize and witness a stronger dollar this week.
In terms of US economic events, the primary focus this week will be on Tuesday’s release of the June retail sales report. However, experts suggest that the data is unlikely to influence monetary policy decisions.
Fed funds futures traders are currently pricing an increase of 32 basis points for the rest of the year, with the benchmark rate reaching its peak in November at 5.40%. This indicates that the market sees minimal chances of further interest rate hikes after the Fed’s meeting on July 25-26.
The decline in US Treasury yields last week stemmed from concerns over weakening consumer and producer price inflation in June, leading to expectations of continued moderation in price pressures and a more measured monetary policy approach.
As of now, the dollar is down 0.12% at 99.832 after reaching a low of 99.574 on Friday, the lowest level since April 2022. Conversely, the euro is up 0.14% at $1.1242, hitting its highest level since February 2022.
Looking ahead, both the Federal Reserve and the European Central Bank are anticipated to raise rates during their upcoming meetings.
The dollar is down 0.07% against the yen, currently at 138.65 yen. On Friday, it had fallen to 137.245, reaching its lowest point since May 17.
Meanwhile, the British pound is slightly down by 0.06% at $1.3082, after hitting $1.31440 on Thursday, its highest level since April 2022.
(Additional reporting by Joice Alves in London, Editing in Spanish by Manuel Farías)