The U.S. dollar swung between small gains and losses against major counterparts Monday after Federal Reserve officials wrapped up a yearly gathering appearing ready to start slowing monetary stimulus next month.
The ICE dollar index , which measures the U.S. currency against six others, slipped to 81.360, down marginally from 81.366 late Friday in North America. It had touched the 81.39 level early Monday, according to FactSet. Last week, the index picked up 0.2%.
The rival WSJ Dollar Index fell to 73.83 from 73.86.
Against the Japanese yen, the dollar bought ¥98.72, up from ¥98.64, while the euro was little changed at $1.3380 compared with $1.3383 on Friday.
This weekend, Federal Reserve officials finished their annual retreat in Jackson Hole, Wyo., and experts attending the conference said the Fed is on track to reduce stimulus efforts in September, with a desire by bank officials to return to conventional monetary policy. The Fed currently buys $85 billion a month in assets to aid economic growth.
However, many conference attendees told MarketWatch they would prefer the central bank to delay tapering of stimulus until later this year. They cited a number of potential hurdles for the economy, such as a recent surge in interest rates, among the reasons for their views.
Monetary stimulus is seen as depressing the value of the dollar, so a tapering delay could put further pressure on the greenback. The currency fell Friday on worries the economy needs more aid from the Fed, as sales of new U.S. homes in July slid 13.4% to adjusted annual rate of 394,000. Economists polled by MarketWatch had expected a sales rate of 485,000.
The report on new home sales also spurred a drop in U.S. Treasury yields, and recent gains in yields had been a source of upside support for the greenback.
This week “may not be particularly instructive regarding the debate over when and by how much the Fed tapers quantitative easing, with generally second-tier data” and speeches by non-voting members of the Fed’s monetary-policy board on the schedule, wrote CIBC World Markets economists Emanuella Enenajor and Andrew Grantham in a report.
Among the data expected, some figures “could cast the U.S. consumer in a slightly dimmer light, as we expect below-consensus numbers for consumer confidence and July’s income and outlays,” CIBC said. Consumer spending and confidence reports are set for Friday.
Later Monday, the Commerce Department is slated to release its July durable-goods report. Analysts polled by MarketWatch expect a decline of 4.9%.
Credit Suisse, which is forecasting a 5% decline in July durable-goods orders, told clients Friday that a drop for the data set “looks overdue, especially after the second strongest three-month stretch on record from April to June.”
However, the “soft patch” in core capital-expenditure shipments should end after four straight gains (through June) for core capex orders and the core capex backlog, wrote Credit Suisse chief economist Neal Soss.
Shipments of core capital equipment are seen as a key monthly gauge of business investment.
In other currency action Monday, the Australian dollar reversed course and rose to 90.36 U.S. cents from 90.28 U.S. cents late Friday.
The British pound traded at $1.5570 versus Friday’s level at $1.5564.
Source : Marketwatch
