Dollar dips as investors prepare for volatile markets ahead of new Brexit vote. However, they focus on Federal Reserve policy decision.
Investors are focused on Wednesday’s Fed meeting. Experts expect policymakers to signal a pause in their tightening cycle and to acknowledge growing risks to the U.S. economy.
That could weigh on the dollar. The greenback has fallen 1% since late December, after enjoying a boost from the Fed’s four rate increases in 2018.
On Monday, the dollar edged down against most major currencies. Traders are awaiting news from U.S.-China talks to see if the world’s largest economies can reach a compromise on trade.
The dollar index, a gauge of its value versus six majors was lower at 95.798, after falling 0.8% on Friday.
On the other side of the Atlantic, the pound slipped after posting its biggest weekly rise in more than 15 months last week. Investors took profits before crucial votes in the British parliament that will aim to break the Brexit deadlock.
With less than two months to go before the Brexit, lawmakers have set up a series of votes in parliament on Tuesday. Through these votes the parliament and the government will try to find a way forward.
But some investors say that even if there is a broad agreement on extending the date of Brexit, it would fail to fuel further gains in the currency.
START TRADINGForex – Commodities – Sterling to remain volatile, Dollar dips
The euro managed to cling to last week’s 0.4 percent gain and traded at $1.1416 on Monday. Economic data out of Germany and France has been weaker than expected. Further, analysts expect the European Central Bank to remain dovish for an extended period. But traders believe Europe’s slowdown and a dovish ECB are priced into the euro. The single currency has traded in a $1.12-$1.16 range over the past three months.
The Australian dollar gained 0.18 percent versus the dollar to $0.7195.
The Sterling drifted lower on Monday after posting its biggest weekly rise in more than 15 months last week. Investors consolidated positions before votes in the British parliament on Tuesday aimed at breaking a Brexit deadlock. The British currency edged 0.4 percent lower to $1.3149 in early trading. Against the euro, it weakened by a similar amount to 86.80 pence.
Analysts expect sterling to remain volatile. Britain is set to leave the EU on March 29, but the British parliament is far from agreeing the leaving terms.
Sources: Reuters, Investing, CNN money
PLEASE NOTE The information above is not investment advice.