U.S. dollar range-bound while risk appetite boosts Australian dollar
The euro was range-bound against the dollar Tuesday as investors awaited for the outcome of the Federal Reserve meeting on Wednesday, while risk-oriented currencies strengthened as hopes for an easing in Sino-U.S. trade tensions buoyed sentiment.
Underpinning risk appetite in markets, there is heightened general optimism that Britain won’t crash out of the European Union without a deal and the U.S. Federal Reserve will likely cut interest rates this week for a third time this year.
The U.S. dollar was “just bouncing around in ranges” ahead of Wednesday’s Fed announcement, said Adam Cole, chief currency strategist at RBC Capital Markets.
Cole thinks further rate cuts, beyond the one expected on Wednesday, are overpriced.
“Unless the Fed guidance is explicitly that they’re close to sanctioning another cut then we think that the market expectation is diminished, then dollar goes up,” he said.
The euro was last down 0.1% at $1.1085 EUR=EBS, close to falling to a 12-day low. Cole expects the euro to be limited to the $1.1050-$1.1100 range.
Against a basket of currencies, .DXY, the dollar was up 0.1% at 97.84, having risen to a 12-day high of 97.93 earlier.
The Australian dollar climbed for a third consecutive session against the Swiss franc, reaching a six-week high of 0.6824 AUDCHF=. The currency pair, widely considered to be a barometer of risk sentiment in the currency markets, has risen by 2.4% so far this month, its biggest monthly rise since April.
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