Dollar heads towards 3-month lows on dovish U.S. Fed meeting expectations. The dollar weakened against its rivals on Tuesday, heading back towards a recent three-month low.
Gold on Tuesday climbed more than 1% to a near 14-month high, supported by expectations of dovish statements from the U.S. Federal Reserve. The U.S. central bank meeting gets underway with expectations growing the Fed will signal its first rate cut in a decade. European Central Bank President Mario Draghi’s comments indicated the possibility of rate cuts.
With so much dovishness already priced into the markets and the dollar having weakened 1% over the past three weeks, some market analysts say the greenback may strengthen if the Fed signals a more neutral stance. The Fed’s policy-setting committee is due to release its latest statement and economic projections at on Wednesday after the end of a two-day meeting.
Against a basket of its rivals, the dollar edged 0.1% lower at 97.437. Greenback is not far away from a three-month low of 96.46 hit earlier this month.
Spot gold was up about 1% at $1,352.23 per ounce at 1257 GMT. Last week, prices had hit a high of $1,358.34, a peak since April 11. U.S. gold futures were up 0.8% at $1,353.7 an ounce. Elsewhere, silver was up 1% at $14.98 per ounce.
START TRADINGForex – Eyes on Fed meeting – Dollar weakens, gold jumps
The euro tumbled at the lower end of a recent trading range against the dollar, holding above the $1.12 line. Markets awaited a speech by European Central Bank chief Mario Draghi where he might shed some more light on how policymakers will fight the next economic downturn.
Sterling held near the $1.2550 line as traders waited for news on the contest for the leadership of the ruling Conservative party. The pound dived to 89.66 pence versus the euro, its lowest level since mid-January.
The pound has weakened more than 6% against the euro since early May. Investors have raised their bearish bets against the British currency on worries that Britain may crash out of the EU without a deal.
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Sources: Reuters, Investing, CNN money