Investing.com – The U.S. dollar fell against a basket of major currencies pressured by strength in the euro despite growing expectations the European Central Bank will not tighten monetary policy this year.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.38% to 96.48.
rose 0.49% to $1.1330, but the strength could prove short-lived. Traders expect the ECB to hold off raising interest rates this year in a bid to stave off the threat of multiple recessions in the bloc.
“The landscape in the eurozone has changed dramatically,” said Kevin Flanagan, senior fixed income strategist, at ETF specialist Wisdom Tree. “At this stage, a rate hike from the ECB in 2019 looks very unlikely.”
The fall in the dollar comes as Federal Reserve Chairman Jerome Powell played down the possibility of a recession in the United States, reiterating the U.S. economy is on solid footing.
“Today, data at the national level show a strong economy. Unemployment is near a half-century low, and economic output is growing at a solid pace,” Powell said in remarks to the Hope Enterprise Corporation Rural Policy Forum, in Mississippi.
rose 0.42% to $1.2904 as British Prime Minister Theresa May asked lawmakers for more time to reach an agreement with the European Union on amending the Irish backstop issue.
With a little over six weeks to go until the U.K. leaves the European Union on March 29, May’s critics have argued the prime minister is attempting to run down the clock to pressure pro-Brexit lawmakers to support the withdrawal deal.
rose 0.14% to Y110.52 as the Bank of Japan cut government bond purchases for the first time in two months. The move drew a muted response in the safe-haven yen, but analysts warned further tapering would lead to upside in the currency as market participants would view this as a tweak in monetary policy.
“The FX market reaction was limited as investors didn’t see the BoJ’s reduction of purchases as a change in its monetary policy,” an analyst note from Mizuho Bank said. But if the BoJ keeps cutting their purchasing amount consistently or rapidly, the market will see this as “tampering, and the yen will appreciate and stocks will plunge,” the bank added.
fell 0.50% to C$1.3237 as rising oil prices propped up the loonie.
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