Dollar in Demand; Sterling Could Be Volatile By Investing.com

  


© Reuters.

By Peter Nurse

Investing.com – The U.S. dollar remains in demand Thursday, after the Federal Reserve did nothing to signal any near-term easing of policy despite issuing a statement that was seen as slightly less confident about the economic outlook.

However, sterling could be the currency to keep an eye on in early trading in Europe, as the Bank of England meets to decide on its monetary policy.

At 03:00 ET (0800 GMT), the Futures, which tracks the greenback against a basket of other currencies, pushed up 0.1% to 97.895, trading near a two-month high.

The greenback is the best performing currency among G10 currencies in January, with the rising 1.6% so far this month. Commodity currencies such as the and have suffered most, due to fears for Chinese growth amidst a spreading coronavirus outbreak.

Overnight China’s National Health Commission said the total number of confirmed deaths had reached 170 as of late Wednesday, with the number of infected patients approaching 8,000. Infections have been reported in at least 15 other countries and in every province of mainland China.

This virus outbreak has resulted in weakness in many emerging currencies, with investors seeking out the safe haven status of the dollar. The offshore briefly touched 7 to the dollar again overnight before strengthening just above that level later.

Elsewhere, sterling could be volatile Thursday, with a degree of uncertainty surrounding the meeting of the Bank of England’s Monetary Policy Committee.

At 03:00 AM ET (0800 GMT), traded at 0.2% lower at 1.3001, and 0.2% higher at 0.8468.

At the start of the year the Bank of England was widely expected to cut interest rates at this meeting. A number of MPC members, including Governor Mark Carney, had spoken publicly about the weak state of the U.K. economy given the uncertainty surrounding the country’s exit from the European Union, which comes into effect on Friday.

However, economic data since then have been generally more positive than expected. For example, the services purchasing managers’ index – a gauge of the health of the country’s dominant sector – came in at 50 in December, ahead of a widely predicted reading of 49.2.

“Despite a few economic data releases that came out stronger than expected, we still expect the BoE to cut the Bank Rate by 25bp,” said analysts at Danske Bank, in a research note.

“ However, it is likely to be a close call, which is also reflected in market pricing, as investors are pricing a 45% probability of a cut, leaving some upside in if we are right in our call,” the bank added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Read More…