Dollar near 3-month low, weighed on the Fed’s reluctant bias

© Reuters. FILE PHOTO: Four thousand dollars is counted by a banker counting the currency at a bank in Westminster, Colorado on Nov. 3, 2009. REUTERS / Rick Wilking / File Photo

From Hideyuki Sano

TOKYO (Reuters) – The dollar was near its lowest level in three months against a resurgent euro, fighting for traction as investors parried earlier bets that the US Federal Reserve may soon be ready to ease its stimulus.

The greenback, measured by a six-currency basket, hovered at 90.027, a bit above a three-month low of 89.646 set on Friday.

The minutes of the April Fed meeting released last week showed that a sizeable minority of policymakers wanted to discuss the decline in bond purchases.

Fed Chairman Jerome Powell’s repeated warnings that it is not yet time to discuss reducing quantitative easing has led many investors to believe that it will be months before the central bank actually takes policy optimized.

“Inflation has been quite high, but retail sales could slowly slow down. And the economic outlook depends on fiscal policy, which is still uncertain,” said Shinichiro Kadota, senior currency strategist at Barclays (LON :).

The White House said Friday it had cut its infrastructure bill from $ 2.25 trillion to $ 1.7 trillion, with cuts in investments in broadband, roads and bridges, but Republicans dismissed the changes as inadequate for them a deal back.

Data from the US Commodity Futures Trading Commission released late Friday showed that speculators increased their net short dollar positions slightly over the past week, while increasing long positions in the euro for four consecutive weeks.

The euro was trading at $ 1.2179, a three-month high of $ 1.2245 hit on Wednesday.

Some analysts said the currency had been capped by comments from European Central Bank President Christine Lagarde on Friday that it was too early for the bank to discuss the handling of its € 1.85 trillion emergency bond purchase program .

However, the euro and other European currencies have been propped up by mounting optimism about the region’s economic reopening due to coronavirus lockdowns.

A preliminary purchasing managers’ index for the eurozone’s dominant service industry in 19 countries, which was published on Friday, rose from 50.5 in April to 55.1, well above expectations and the highest level since June 2018.

The British pound was trading at $ 1.4144, up from a three-month high of $ 1.4233 on Friday.

The yen barely moved at 108.92 per dollar.

In the volatile cryptocurrency market, Bitcoin fell over 7% over the weekend, most recently trading at $ 34,157 after falling to $ 31,107 on Sunday.

Ether fell to a two-month low of $ 1,730 on Sunday, a 60% decrease from a record high 12 days ago and last traded at $ 2,052.

Cryptocurrencies have fallen after Elon Musk’s Tesla (NASDAQ 🙂 announced that it would no longer accept Bitcoin and after China tightened measures against them.

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