Dollar trading flat amidst cautious investors sentiments
The US dollar is trading flat as the European session gets underway. After dropping more than 1% during the previous seven days the dollar index is starting the week without significant movement, illustrating investors’ settled expectations on a 75bp rate hike by the Federal Reserve later this week. After the turmoil of previous weeks, when the prospect of a rate rise of 100bp was at some point seen as realistic, the waters are now calmer as it is seen as most likely that the Fed will not deliver any surprises on Wednesday and will increase rates by 75bp. The main point of interest will instead be the tone adopted by Jerome Powell, with observers keen to gauge the sentiment within the central bank and adjust expectations for the times ahead.
Gold prices have barely moved during early Monday trading, reflecting the performance of the US dollar, which is also trading flat. Market expectations have settled on a 75bp rate hike by the Federal Reserve this Wednesday, and so the mood in the markets is now calmer, contrasting with the greater turbulence of previous weeks, when a rate rise of 100bp points was, at some point, seen as likely. With demand for the dollar having stabilized, and growing concerns over the prospect of an economic slowdown forcing central banks to re-think the tightening of monetary policies, gold is finding some support, with more clarity likely after Wednesday’s speech by Jerome Powell, which is expected to provide clues for what will be the Fed’s stance in the weeks ahead.
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