© Reuters. Dollar slips before Fed, euro pushes higher
Investing.com — The dollar pulled back from Friday’s three-month highs against a basket of other major currencies on Monday, as investors your attention to a Federal Reserve decision this week.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped 0.16% to 94.58 08:44 PM ET (12:44 P.M.), Friday, three-month-high of 95.06.
The dollar slipped as investors gains its biggest weekly gain in the result, so far this year, as they waited to see whether the recent strong economic data would lead one to adopt the Fed’s more hawkish stance.
The Fed is holding a two-day monetary policy meeting on Tuesday and Wednesday where it is expected to keep that pace.
Data on Friday showed that the U.S. economy grew at a 3% annual rate in the third quarter, better than forecasts for growth of 2.5%.
Meanwhile, a report on Monday showed that U.S. consumer spending most of the increased in more than eight years in September, jumping 1.0%, but underlying inflation remained muted.
The stronger-than-expected data underlined the arguments for the Fed to raise interest rates at a faster pace in the coming months. Higher prices tend to make the dollar more attractive to yield-seeking investors.
Investors were also cautious before a decision of President Donald Trump on his pick for the next Fed Chairman.
The dollar was slightly dipping low against the yen, with USD/JPY 113.60, as of Friday, three-month-high of 114.44.
The euro pushed higher, with EUR/USD rose 0.18% to 1.1630.
The gains came after the single currency posted its worst week since March last week, falling 1.48% against the greenback as a quiet European Central Bank and political turmoil in Spain weighed in Catalonia.
The euro found support on Monday as fears about Catalonia and relaxed after the weekend polls indicate that the Catalan secessionists lose held their majority in the elections for December.
Meanwhile, the pound sterling increased, with GBP/USD 0.44% rose to 1.3191 largely driven by expectations that the Bank of England interest rates for the first time in almost a decade on Thursday.