- ECB, BOE, Turkey’s central bank to unveil rate decisions
- Currencies trapped in tiny ranges; Norwegian crown rises
The dollar drifted higher against a basket of its rivals on Thursday, above a two-week low plumbed in the previous session, as investors moved to the sidelines before a trio of central bank policy decisions.
While overnight headlines that Washington was seeking a new round of trade talks with Beijing boosted risk appetite, major currencies were hovering in tiny ranges with only the Japanese yen leading losers against the greenback.
The dollar rose 0.2 percent to 94.93, rising from a end-August low of 94.73 hit in the previous session.
The euro and the pound held steady ahead of policy decisions by the European Central Bank and the Bank of England later in the day.
“The eurozone economy is doing fine and inflation is printing at or around target – but the immediate concern for us is that Italy continues to make headlines, as does Brexit, and trade,” said Dean Turner, economist at UBS Wealth Management.
The ECB is all but certain to keep policy unaltered on Thursday, making only nuanced changes to its guidance to stay on course to end bond purchases this year and raise interest rates next autumn.
The Bank of England is also expected to hold fire after raising interest rates last month with market expectations of another rate hike only seen in the second half of next year.
Perhaps the most watched rate decision will be from Turkey’s central bank whose rate hikes will be eyed as a test by investors of what steps emerging markets are taking to restore confidence after a turbulent summer.
In a Reuters poll, all 11 economists predicted the benchmark one-week repo rate, now at 17.75 percent, would be raised. The average forecast was for a hike to 22 percent, but predictions ranged widely from an increase of 225 basis points to 725 basis points.
Turkey’s lira was almost flat at 6.3475 per dollar . It had slumped to a record low 7.2400 in mid-August, raising investor expectations for the central bank to tighten monetary policy and arrest the currency’s slide.
The Norwegian crown was the only major currency holding its own against the dollar, consolidating a chunky 1.5 percent rise so far this week as expectations rose of a bank rate hike next week after strong inflation data.