FOREX-Big week for currency markets as central banks meet

By Kitco News / July 30, 2018 / www.kitco.com / Article Link


* Markets range-bound awaiting crucial data, central bankmeetings
* Euro rises, yen pauses after recent rebound on BoJspeculation
* Yuan remains under pressure against dollar
* Swedish crown surges after GDP figures

LONDON, July 30 (Reuters) - Major currencies largely stuckto familiar ranges on Monday as investors shied away from takingbig positions ahead of a flurry of crucial economic data andcentral bank monetary policy meetings this week.

The Bank of Japan ends a two-day meeting on Tuesday, theFederal Reserve concludes its meeting on Wednesday and the Bankof England is expected to raise interest rates on Thursday, abusy week which could set the near-term course for currencies.

The euro bucked the quiet mood, reversing some of the lossesthat followed the European Central Bank's reaffirmation lastweek that rates would stay low through the summer of 2019.

Those gains came despite slightly softer German inflationnumbers and euro zone sentiment data, and analysts said theeuro's rebound was largely because traders felt it had beenoversold last week.Investors appeared reluctant to make large bets for now.

"It will be an active week, there is a lot of event risk,"Credit Agricole analyst Manuel Oliveri said, referring to thecentral bank meetings as well as U.S. jobs data due on Friday.

"Markets are pretty much range-bound and it doesn't looklike there is much motivation to enter big positions."

Oliveri said dollar net long positions remained at theirlargest for several months, and the greenback's recent strengthwas vulnerable to a reversal of those positions.

The euro rose 0.3 percent to $1.1681 against thedollar.

The dollar index fell 0.2 percent to 94.495.

Upbeat second quarter U.S. gross domestic product data lastweek failed to lift the greenback, as markets had mostly pricedin strong figures. Data that incorporates July, when tariffsagainst Chinese goods were activated, should prove moreimportant.

The Swedish crown stood out as the biggest mover of the day,rallying more than 0.8 percent against the dollar and theeuro after forecast-beating second-quarter GDPnumbers.The dollar was 0.1 percent higher at 111.10 yen , withmarkets preparing to see whether the BOJ is considering takingsteps to make its massive stimulus programme more sustainable.

The dollar has eased from a six-month high above 113.00 yenhit on July 19, following speculation that the BOJ is preparingto tweak its policy.

Rabobank strategist Jane Foley said she was not expectingthe BOJ to row back from its plans to continue with its stimulusbecause in the past the central bank had signalled itsintentions to tweak policy before doing so.

"They haven't told the market they are looking at something.Central banks rarely want to surprise the market," she said.

The Chinese yuan continued to weaken. In offshore markets itfell to as low as 6.85 yuan per dollar , close to theone-year low it reached last week.

The yuan has been under relentless presure in recent monthsbecause of nervousness about what a dispute over trade with theUnited States will mean for China's economy. (Editing by Louise Ireland)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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