The dollar rode higher on Monday as traders set their expectations for severe U.S. rate of interest cuts this month and intensified Middle East tensions supported safe-haven assets.
While the currency-market focus will center on world central bank decisions programmed for the following two weeks, investors are further expecting developments in U.S.-China trade discussions and Wall Street earnings.
The dollar broke above 108 yen to hit its most leading since Wednesday, though that was nonetheless in the middle of the 107-109 array where it has traded for a month. The greenback index was barely modified at 97.179 after gaining 0.35% last week.
Geopolitical fears had been controlled by confrontation in the oil trade’s most vital waterway escalating, with footage exhibiting the Iranian army defying a British warship when it seized a tanker in the Strait of Hormuz on Friday.
The euro held close to critical chart support nearly $1.12, a break of which could result in further losses.
On the policy ground, markets often expect central banks to either reduce rates or maintain settings accommodative, beginning with the European Central Bank (ECB), which meets on Thursday adopted by the Bank of Japan after which the Fed next week.
Pricing for a 50-basis-point Fed cut sailed last week after a dovish speech by New York Fed President John Williams. Those predictions later reduced after a Fed spokesperson explained that the remarks didn’t refer to “possible policy actions.”
Priced-in forecasts for a 50-basis-point cut have fallen from as high as 71% last week to 18.5% Today.
Earnings due this week from bellwether corporations such as Caterpillar and Amazon.com may also be intently watched for signs on the U.S. health.