July 29, 2020 / 1:52 PM / in 16 days

FOREX-Dollar dips to two-year low before Fed statement

 (Adds details, updates prices; changes byline, dateline;
previous LONDON)
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

    By Karen Brettell
    NEW YORK, July 29 (Reuters) - The U.S. dollar fell to a
two-year low on Wednesday before the Federal Reserve is expected
to affirm its commitment to holding rates near zero for years,
with investors focused on whether the U.S. central bank will
also indicate a higher tolerance for future inflation.
    Expectations that the Fed will let inflation run higher than
previously expected before raising interest rates has helped
send real yields to near-historic lows and is also raising some
fears that the dollar’s role as a reserve currency could shrink.
    “Forex markets will be laser-focused on whether there is a
signal that it will tolerate higher inflation, as this could
weigh on real yields, and thereby the dollar, further,” analysts
at Action Economics said in a report.
    Real 10-year Treasury yields, which reflect
returns after expected inflation, have fallen to negative 0.93%.
    The dollar has also been held down by a continued rise in
coronavirus cases in the United States, even as other parts of
the world, including Europe, appear to have contained outbreaks.
    “The dollar's outlook remains weak thanks to the diverging
trends in coronavirus cases between Europe and the U.S.," said
Ulrich Leuchtmann, head of foreign exchange and commodity
research at Commerzbank.
    U.S. deaths from the novel coronavirus were approaching
150,000 on Wednesday, the highest level in the world and rising
by 10,000 in 11 days, according to a Reuters tally.
    Against a basket of other currencies the dollar fell
0.26% to 93.51, after earlier dipping to 93.39, its lowest level
since June 2018. It has weakened more than 3% since the last Fed
meeting as yields on benchmark U.S. Treasury debt have fallen
more than 20 basis points since then.
    The weakening dollar pushed the Australian dollar higher,
with the currency trading at $0.7180, hitting a 15-month
peak after data showed Australia's consumer prices fell by a
record in the second quarter.
    The euro traded at $1.1752, up 0.32%, although it has
stepped back from Monday's 22-month high of $1.17815.
The dollar traded at 105.05 yen, after earlier falling to
a four-month low of 104.81 yen.
    Sterling gained 0.43% to $1.2985, the highest since
March.
    Elsewhere, the Turkish lira held near record lows after it
plunged 2% in minutes on Monday before reversing most of that
fall. One-week and one-year Turkish lira implied volatility
gauges jumped to their highest level in two months.
========================================================
    Currency bid prices at 9:30AM (1330 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1752        $1.1714     +0.32%         +4.84%      +1.1769     +1.1715
 Dollar/Yen       JPY=        105.0500       105.0800    -0.03%         -3.51%      +105.2400   +104.8100
 Euro/Yen         EURJPY=     123.46         123.11      +0.28%         +1.24%      +123.4700   +123.0300
 Dollar/Swiss     CHF=        0.9169         0.9179      -0.11%         -5.26%      +0.9187     +0.9141
 Sterling/Dollar  GBP=        1.2985         1.2930      +0.43%         -2.07%      +1.2991     +1.2913
 Dollar/Canadian  CAD=        1.3352         1.3376      -0.18%         +2.82%      +1.3387     +1.3340
 Australian/Doll  AUD=        0.7180         0.7157      +0.32%         +2.26%      +0.7193     +0.7150
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0778         1.0752      +0.24%         -0.68%      +1.0782     +1.0750
 Euro/Sterling    EURGBP=     0.9049         0.9058      -0.10%         +7.04%      +0.9087     +0.9035
 NZ               NZD=        0.6661         0.6660      +0.02%         -1.11%      +0.6679     +0.6642
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.0675         9.1167      -0.54%         +3.29%      +9.1334     +9.0537
 Euro/Norway      EURNOK=     10.6590        10.6820     -0.22%         +8.35%      +10.7050    +10.6490
 Dollar/Sweden    SEK=        8.7605         8.7697      +0.07%         -6.28%      +8.7836     +8.7225
 Euro/Sweden      EURSEK=     10.2959        10.2885     +0.07%         -1.66%      +10.3025    +10.2633
 
    

 (Reporting by Karen Brettell; additional reporting by Saikat
Chatterjee in London; editing by Jonathan Oatis)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below