On the eve of Bank C meetings, the dollar fluctuated near the lowest level in the last eight months

SINGAPORE, Jan 26 (Reuters) – The dollar was near an eight-month low against its peers as a dismal U.S. corporate earnings season fueled fears of a recession and traders were cautious ahead of central bank meetings next week. It was preserved on Thursday. .

The U.S. dollar index, which measures the U.S. dollar against a basket of currencies, was 0.1 percent higher at 101.65 after falling to 101.52 earlier in the session, testing last week’s eight-month low of 101.51.

Business was weak, with Australia away for the holidays and some parts of Asia still away for the Lunar New Year.

Weak earnings and guidance from U.S. companies and a series of layoffs in the tech sector have fueled fears of a deep recession in the U.S., prompting investors to lower expectations about how much more time the Federal Reserve will have to raise rates sharply. Interest needs have been reduced.

“There are now signs that the U.S. economy may be slowing in a more meaningful way,” Wells Fargo economists said.

With the Federal Reserve no longer responsible for raising interest rates and US economic trends deteriorating, we now believe the US dollar has entered a period of cyclical depreciation against most foreign currencies.

The Federal Reserve’s policy committee will begin its two-day meeting next week, and markets priced in a 25 basis point increase in interest rates, a step up from the central bank’s 50 basis point and 75 basis point hikes last year. .

Earlier, the Commerce Department is scheduled to release preliminary estimates of fourth-quarter US gross domestic product later Thursday.

Meanwhile, markets expect the Bank of England and European Central Bank (ECB) policymakers, who will also meet next week, to raise interest rates by 50 bps. The European Central Bank is likely to remain hawkish.

The pound was little changed at $1.2400, while the euro fell 0.03 percent to $1.0911, although it remained close to Monday’s nine-month high of $1.0927.

“The euro is attracting a lot of attention,” says Jarrod Kerr, chief economist at Kiwi Bank. The eurozone “had a good winter… the energy crisis that people were expecting hasn’t quite happened yet.”

Elsewhere, the Canadian dollar last traded at 1.3399 per US dollar after the Bank of Canada raised its key interest rate to 4.5 percent on Wednesday, but became the first major central bank to tackle global inflation. and announced that it would likely hold off on further increases for the time being. .

The Australian dollar rose 0.2 percent to $0.7117 after shock data on Wednesday showed Australian inflation hit a 33-year high in the last quarter.

The kiwi rose 0.1 percent to $0.6486, down 0.43 percent in the previous session, as New Zealand’s fourth-quarter annualized inflation came in below the central bank’s forecast.

In Asia, the Japanese yen rose 0.2 percent to 129.32 per dollar.

Bank of Japan (BOJ) policymakers discussed the outlook for inflation at their January meeting, with some warning that sustained wage gains may take time, a summary of comments at Thursday’s meeting showed.

At that meeting, the BOJ kept ultra-low interest rates unchanged but strengthened monetary policy tools to keep the 10-year bond yield from breaking its new 0.5% ceiling. Its decision defied market expectations for further changes in monetary policy.

Report by Rae Wee; Edited by Bradley Pratt and Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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