(Repeating to additional clients)
* Dollar still down as markets weigh adding risk
* Markets mindful of next U.S. payroll report on Friday
* Aussie and pound in focus before central bank meetings
By David Henry
NEW YORK, Aug 2 (Reuters) - The dollar eased slightly on Monday as markets assessed how tightly to
embrace risk following dovish statements from Federal Reserve policy makers last week and mixed economic
data.
The dollar index, which measures the currency against six major peers, was down less than 0.1% at
92.05 in the afternoon in New York after having been down about 0.2% on the day.
The index last week dropped 0.9%, the dollar's worst week since early May, as it turned away from the
previous week's 3-1/2-month high when traders were positioning for a speedy start of Fed tapering of support
for the economy.
"The U.S. dollar has begun August with a heavier tone as risk appetites rebuild," Marc Chandler, chief
market strategist at Bannockburn Global Forex, said in a note to clients.
But the additional risk appetite in the dollar seemed satisfied after U.S. 10-year Treasury yields fell
and stocks lost momentum after a report in the morning that U.S. manufacturing activity grew in July, but at
a slower pace.
U.S. Treasury bond yields fell to 1.18% on Monday afternoon from 1.226% on Friday and real yields -
adjusted for inflation - reached record lows.
The U.S. manufacturing report reinforced the idea that growth may have peaked.
The euro was up less than 0.1% on the day at $1.187. It showed little reaction to a Purchasing
Managers Index (PMI) reading of July manufacturing that had been seen as a possible mover.
The British pound also little changed at $1.389, ahead of a Bank of England meeting later in the week.
The recent move away from the dollar hardened after dovish comments from Fed officials indicated that
lower interest rates and tapering of support for the economy will probably not come as quickly as markets
had begun to expect.
In comments last Wednesday, following a meeting of Fed policy makers, Fed Chair Jerome Powell said
considerations of higher interest rates were "a ways away." The tone was affirmed on Friday when Fed
Governor Lael Brainard said Friday "employment has some distance to go" to improve enough for the Fed to
back away from support for the economy.
Currency markets seemed ready to hold off on bigger moves ahead of the U.S. July nonfarm payrolls
report, due on Friday. Another possible turning point could come at the end of this month when central
bankers meet for an annual symposium in Jackson Hole, Wyoming. Fed officials could use the forum to shift,
or affirm, their tone.
A dollar rally "is unlikely to resume in force until a more hawkish Fed narrative takes hold," Win Thin,
global head of currency strategy at Brown Brothers Harriman, said in a note. He added that he is bullish on
the dollar and said he expects strong economic growth into the third quarter.
NatWest analysts said "exit strategies" from government and central bank support programs, as well as
new lockdowns, will drive currencies in the near term. Investors will be watching this week's meetings at
the Bank of England and Reserve Bank of Australia.
While sterling is supported by the possibility of an early end to BOE stimulus, the Australian central
bank could well backtrack on its previous decision to taper stimulus, as protracted COVID-19 lockdowns weigh
on growth.
The Aussie was up 0.2% at $0.7363.
========================================================
Currency bid prices at 3:17PM (1917 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 92.0500 92.1080 -0.05% 2.299% +92.1740 +91.9110
Euro/Dollar $1.1872 $1.1867 +0.04% -2.83% +$1.1897 +$1.1860
Dollar/Yen 109.2800 109.6900 -0.38% +5.76% +109.7650 +109.1900
Euro/Yen 129.72 130.15 -0.33% +2.21% +130.4200 +129.6100
Dollar/Swiss 0.9052 0.9051 -0.01% +2.29% +0.9067 +0.9038
Sterling/Dollar $1.3889 $1.3896 -0.03% +1.68% +$1.3933 +$1.3876
Dollar/Canadian 1.2507 1.2468 +0.34% -1.76% +1.2515 +1.2455
Aussie/Dollar $0.7363 $0.7347 +0.24% -4.26% +$0.7382 +$0.7330
Euro/Swiss 1.0747 1.0741 +0.06% -0.56% +1.0766 +1.0741
Euro/Sterling 0.8546 0.8534 +0.14% -4.38% +0.8557 +0.8526
NZ $0.6973 $0.6977 -0.02% -2.87% +$0.6993 +$0.6953
Dollar/Dollar
Dollar/Norway 8.8295 8.8345 -0.15% +2.73% +8.8415 +8.7785
Euro/Norway 10.4833 10.4576 +0.25% +0.16% +10.4908 +10.4300
Dollar/Sweden 8.5945 8.5847 -0.02% +4.86% +8.6087 +8.5674
Euro/Sweden 10.2033 10.2053 -0.02% +1.26% +10.2235 +10.1790
(Reporting by David Henry in New York and Sujata Rao in London.
Additional reporting by Kevin Buckland in Tokyo
Editing by Peter Graff, Barbara Lewis, Jonathan Oatis, Jane Merriman and Dan Grebler, William Maclean)
https://www.reuters.com/article/global-forex/rpt-global-forex-dollar-soft-on-mixed-mood-on-risk-central-bank-moves-idUSL1N2P926X
2021-08-02 20:11:00Z
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