By Gertrude Chavez-Dreyfuss and Ozan Ergenay
NEW YORK/LONDON (Reuters) -The U.S. dollar traded narrowly mixed on Monday, as investors weighed dovish remarks from Federal Reserve officials that boosted expectations for a rate cut next month, limiting the greenback’s upside against some of the major currencies such as the euro and Swiss franc.
The U.S. currency, however, rose against the yen, as investors remained on the lookout for signs of official buying from Tokyo to stem the slide in the Japanese currency. The dollar also slightly gained versus commodity currencies such as the Australian and New Zealand units.
Volume was thinner than normal due to a holiday in Japan.
In mid-morning trading, the euro rose 0.1% against the dollar to $1.1527, which put the dollar index down 0.1% at 100.17. Against the Swiss franc, the dollar slid 0.2% to 0.8074 franc.
Fed Governor Christopher Waller said on Monday that available data showed the U.S. job market remains weak enough to warrant another quarter-point rate cut at the U.S. central bank’s December 9-10 policy meeting.
His remarks followed those of New York Fed President John Williams on Friday who said that the U.S. central bank can still cut interest rates “in the near term” without putting its inflation goal at risk.
Following their comments, Fed fund futures have increased the chances of an interest rate cut of a quarter-point next month to a nearly 80% chance, from 30% before their remarks, according to the CME’s FedWatch tool.
Several regional Fed governors, however, argued for delaying further easing until there is clear evidence that inflation is on track to fall to the Fed’s 2% target from a still-elevated level.
“While the odds have crept up a little bit more today in favor of a rate cut next month, it seems to be having just a little impact on the dollar, which means that it’s a bit of an open question,” said Marc Chandler, chief market strategist at Bannockburn Global in New York.
Markets are also gearing up for potential catalysts, including the release of U.S. retail sales and producer prices data due later in the week.
YEN WOES, STERLING FLAT
The yen on Monday was the worst performer against the dollar, which rose 0.4% to 157.07 yen, just shy of its 10-month high hit last week of 157.90..
Japan’s currency has been sliding on a combination of looser fiscal policies and some of the lowest interest rates in the world, prompting traders to ask whether Japanese authorities might step in to stop their currency weakening further.
The yen, however, managed to gain some ground last Friday, bouncing from 10-month lows after Finance Minister Satsuki Katayama stepped up verbal intervention warnings to stem the currency’s decline.
Traders see a risk of intervention somewhere between 158 and 162 yen per dollar, with Thanksgiving-thinned trade later in the week a possible window for authorities to step in.
Japan can actively intervene in the currency market to mitigate the negative economic impact of a weak yen, Takuji Aida, a private-sector member of a key government panel, said in a television program on public broadcaster NHK on Sunday.
Nick Rees, head of macro research at Monex Europe, said intervention would help slow the rise of the dollar against the yen but would not derail it completely, given that the dynamics underpinning such a move were unlikely to change anytime soon.
In other currency pairs, sterling was marginally softer at $1.3085 against the dollar ahead of Wednesday’s budget announcement. Finance minister Rachel Reeves is seeking a balance between spending to support faltering growth and demonstrating to investors that Britain can meet its fiscal targets. [GBP/]
Cryptocurrency markets steadied over the weekend, but pressure resumed on bitcoin <BTC=>, which was down 1.8% at $86,431.78.
Currency
bid
prices
at 24
November
03:45
p.m. GMT
Descript RIC Last U.S. Pct YTD High Low
ion Close Chang Pct Bid Bid
Previous e
Session
Dollar 100.2 100.24 -0.03 -7.64% 100.29 100
index % .01
Euro/Dol 1.1523 1.1512 0.1% 11.31% $1.155 $1.
lar 1 150
3
Dollar/Y 156.95 156.42 0.46% -0.13% 157.14 156
en 5 .67
4
Euro/Yen 180.84 180.03 0.45% 10.8% 181.26 180
.2
Dollar/S 0.8086 0.8087 -0.02 -10.91 0.8102 0.8
wiss % % 061
Sterling 1.3083 1.3099 -0.09 4.64% $1.311 $1.
/Dollar % 8 308
2
Dollar/C 1.4109 1.4104 0.04% -1.88% 1.4118 1.4
anadian 093
Aussie/D 0.6458 0.6457 0.04% 4.39% $0.647 $0.
ollar 644
2
Euro/Swi 0.9316 0.9307 0.1% -0.82% 0.9326 0.9
ss 302
Euro/Ste 0.8805 0.8791 0.16% 6.43% 0.8819 0.8
rling 787
NZ 0.5607 0.5612 -0.06 0.22% $0.561 0.5
Dollar/D % 8 598
ollar
Dollar/N 10.2357 10.2275 0.08% -9.94% 10.262 10.
orway 3 213
3
Euro/Nor 11.794 11.7856 0.07% 0.21% 11.826 11.
way 785
Dollar/S 9.5599 9.5318 0.29% -13.23 9.5616 9.5
weden % 259
Euro/Swe 11.0158 10.9845 0.29% -3.93% 11.018 10.
den 5 986
(Reporting by Gertrude Chavez-Dreyfuss in New York and Ozan Ergenay in London; Additional reporting by and Tom Westbrook in Singapore; Editing by Shri Navaratnam, Amanda Cooper, Gareth Jones and Chizu Nomiyama)
