Dollar drifts lower; consolidating ahead of Fed minutes
Investing.com — The U.S. dollar edged lower in early European trade Monday, handing back some of its recent gains in holiday-affected trade ahead of the release of the latest Fed minutes for clues of the outlook for U.S. interest rates.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 104.067, remaining close to three-month highs.
The Presidents’ Day holiday in the U.S. has limited activity in the foreign exchange markets Monday, and traders have used the opportunity to back some recent dollar gains.
The greenback registered gains last week, its fifth successive positive week, after data showed both U.S. producer prices and consumer prices increased more than expected in January, raising the prospects of the Federal Reserve pushing back the start of its rate-cutting cycle to the start of summer compared with March at the beginning of the year.
The main focus this week will be on the minutes of the Fed meeting from last month, scheduled for Wednesday, while several Fed officials, including Christopher Waller and Raphael Bostic, are also due to speak this week.
In Europe, EUR/USD traded 0.1% higher at 1.0783, trading in a tight range as traders await Tuesday’s ECB survey of negotiated wage rates, and then the release of the flash PMIs for February on Thursday.
The ECB's wage data will be of importance given how much policymakers have warned about high wage growth, even though it is a well known lagging indicator.
“The issue will be how much, if at all, negotiated wages slowed from the prior survey of around 4.7% year-on-year,” said analysts at ING, in a note. “Here, a high figure could raise expectations that the broader wage release in
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