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Dollar mostly flat in early Asia in light regional day

7/24/2017, 10:47:20 AMBasics of Trading
Dollar mostly flat in early Asia in light regional day

The dollar pointed mostly flat on early Monday in Asia with sentiment linked to the Fed meeting later this week in an otherwise light regional data day.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.32% to 93.78, the lowest close since June 22, 2016.

AUD/USD traded at 0.7916, up 0.01%, while USD/JPY changed hands at 111.10, down 0.02%.

On Wednesday, the Fed will give its latest views on rates ahead of the first look at U.S. second quarter growth on Friday. The Fed is expected to hold steady.

Survey data from the euro zone on Monday will help gauge the strength of the ongoing recovery in the euro area. The UK is to release data on second quarter growth on Wednesday.

Last week, the U.S. dollar fell to its lowest level in more than a year against a basket of the other major currencies on Friday, pressured lower by the stronger euro and persistent concerns over U.S. political uncertainty.

The euro was propelled higher by expectations that the European Central Bank is moving closer to tapering its bond-buying program.

On Thursday, ECB President Mario Draghi said the bank will discuss when to trim its asset purchase program in the fall.

The dollar was also hit by fresh political turmoil in Washington.

On Thursday, Bloomberg reported that the investigation into alleged links between President Donald Trump’s campaign and Russia in last year’s election is extending into his business.

Earlier in the week, Republican lawmakers pulled the plug on the latest version of a contentious bill to replace Obamacare, delivering a major policy blow to the Trump administration.

The failure to deliver on healthcare reform indicated that Trump’s other legislative efforts, such as overhauling the tax code and implementing fiscal stimulus could face difficulties.

Hopes for tax reforms and fiscal stimulus under the Trump administration helped drive the dollar to a 14-year high after the November election. The dollar has now given up all of its post-election gains.

Doubts over the Federal Reserve’s plans for a third rate hike this year have also fed into dollar weakness. The Fed is to hold its next meeting on Wednesday and is widely expected to hold policy steady.