The dollar index was last very slightly higher on Monday at 104.49
The dollar was broadly steady on Monday as investors awaited further clues to help chart the U.S. interest rate trajectory in the wake of cautious comments from Fed officials, even as inflation shows signs of cooling.
The euro was little changed at $1.0871, not far from the nearly two-month high of $1.0895 it hit last week. It is up 2% so far in May, boosted by a decline in the dollar on the back of softer U.S. growth and inflation data as well as a pick-up in the euro zone economy.
Data last week showed U.S. consumer prices rose less-than-expected in April, leading to markets pricing in 50 bps of Fed rate cuts this year. Yet various Fed officials subsequently sounded words of caution about when rates may drop, prompting market pricing to drop just below the 50 bp mark.
The dollar index was last very slightly higher on Monday at 104.49. It has dropped nearly 2% since reaching a more than five-month high in April.
Neil Jones, who works in financial institutions FX sales at currency services firm TJM FX, said a “barrage” of speeches from Fed officials will keep investors alert this week.
If the market trends quite firmly in one direction or the other (on interest rate cut bets), then the tendency of Fed speakers is to act somewhat contrarian in their commentary, he added.
Four Fed speakers, including Atlanta Fed President Raphael Bostic, are due to speak on Monday. Markets will also focus on minutes of the Fed’s last meeting due on Wednesday. Survey-based gauges of the economy for the euro zone, Germany, the UK and the U.S. are also due this week, alongside more central bank speeches.
