The U.S. dollar firmed up on Tuesday, December 6, but moved in a narrow range, as investors made bets ahead of a pair of influential central-bank policy meetings in the days ahead, MarketWatch reports.
The ICE U.S. Dollar Index DXY, +0.31% which gauges the buck against six rivals, was at 100.52 compared with 100.14 late Monday in New York.
The rally in the greenback comes ahead the European Central Bank meeting on Thursday and the Federal Reserve’s meeting set for Dec. 13-14.
Wall Street is pricing in a high probability of a rate increase by the Fed next week, according to CME Group data. It now shows a 92.7% probability of a quarter-point Fed funds rate increase compared with 100% odds priced in last week.
Traders said the dollar may reflect a market view that the pace of rate hikes in 2017 may be more rapid than previous moves by the central bank.
Upbeat U.S. data on Thursday didn’t change that view, while many parts of the world are wrestling with sluggish growth. The disparity only highlights the dollar-supportive interest-rate gap between the U.S. and elsewhere.
A strengthening path for the dollar comes against the backdrop of concerns about economic and political stability in other parts of the globe, including Europe.
Some market watchers believe Monday’s muted response to Italy’s referendum signaled that the country’s woes don’t augur for the demise of the euro. However, investors will be looking for further clarity about the health of European economy and its shared monetary unit on Thursday from ECB President Mario Draghi.
