FX Commentary

FX Commentary

The dollar steadied on Monday afternoon after bouncing off a one-month low as traders weighed the prospects of higher interest rates for different currencies and considered how coming economic data and central bank comments could impact their positions. The upward move came at the expense of the euro, the Japanese yen and the Swiss franc. The change seemed to indicate that the market had taken the dollar down too much recently on expectations that inflation outside the U.S. will force up interest rates for other currencies faster than for the greenback. The dollar index against major currencies steadied with a gain of nearly 0.2% for the day after turning up from a one-month low in early trading. Before the turn, the index had lost 1% over two weeks.

Threats to current positions could come on Thursday from the European Central Bank and from U.S. economic data and from U.S. and European inflation data on Friday, as well as a meeting of the Bank of Canada on Wednesday. The U.S. Federal Reserve meets next week. At one point the dollar index was up 0.4% on the day as the yield on the 10-year U.S. Treasury rose. The dollar eased off and the 10-year yield fell back and was last around 1.63% and little changed for the day. Crude oil, too, climbed and then eased for the day. The euro lost 0.3% to $1.1613.

The European Central Bank meeting on Thursday is not expected to make big news but comments from the bank could shift views on how much inflationary pressures could impact interest rates.

Thursday's U.S. gross domestic product figures -- if they show an expected slowdown -- could take some pressure off the Fed even while inflation runs relatively hot. Cryptocurrency with bitcoin was up 3% at $62,997 after last week reaching $67,000.