Dollar Loses Ground Against Major Rivals Ahead Of Fed Policy

The U.S. dollar stayed weak for much of the session on Monday as positive news on the trade front took some shine off the safe haven currency.

Additionally, traders were also weighing the prospects for a 25-basis points rate cut by the Federal Reserve, which is scheduled to announce its monetary policy on Wednesday after a two-day meeting.

The dollar index declined to 97.67 in early trades, and despite recovering to 97.89 by mid morning, failed to find support and dropped to 97.71. The index had settled at 97.83 on Friday.

Against the euro, the dollar was down by about 0.2% at 1.1101, after weakening to 1.1108 earlier in the day.

Against pound sterling, the dollar weakened to 1.2858, giving up 0.26% from previous close of 1.2825.

Sterling’s rise was due to the European Union’s decision to grant a three-month extension to the U.K. for leaving the bloc. The EU’s move has sort of removed the risk of a damaging no-deal split on Thursday.

The dollar was firm against the Japanese yen. In late afternoon trades, a unit of dollar fetched 108.95 yen, lower than the day’s high of 109.04 yen, but significantly higher than previous close of 108.66.

Data from the Bank of Japan showed that Japan producer prices rose 0.5% on year in September – in line with expectations and unchanged from the August reading following a downward revision from 0.6%.

The dollar was little changed against the loonie and Swiss franc, at 1.3055 and 0.9947, respectively.

Against the Aussie, the dollar was lower by about 0.22%, with the AUD-USD pair at 0.6838.

The Office of the U.S. Trade Representative said in a statement that the countries have “made headway on specific issues and the two sides are close to finalizing some sections of the agreement.”

On Saturday, China’s Commerce Ministry said both sides are “close to finalizing” some parts of a trade agreement after high-level telephone discussions on Friday.

U.S. President Donald Trump said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile.

The material has been provided by InstaForex Company – www.instaforex.com