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Dollar stability as markets await the results of the Canada and Europe bank meetings.

Dollar stability as markets await the results of the Canada and Europe bank meetings.

By Mohamed nasar

Published: June 5, 2024


The dollar stabilized today, Wednesday, ahead of the monetary policy meeting in Canada, which traders are betting will begin a rate-cutting cycle planned by central banks in the largest economies in the world.

The Bank of Canada is also meeting today, one day before the European Central Bank's meeting tomorrow, Thursday.

Markets estimate a 75% chance of a rate cut in Canada and a 95% chance of a rate cut in Europe, according to "Reuters".

The Canadian dollar remained stable at 1.3678 against the US dollar, while the euro stabilized at 1.0881 US dollars.

Joe Capurso, a strategist, said: "If policymakers suggest that there is a green light for further rate cuts this year, I think that could really weaken the Canadian dollar."

The yen also fell about 0.4% to 155.56 yen per dollar in quiet Asian markets, reversing some gains made yesterday as investors abandoned their bets in emerging markets.

Data showed on Wednesday a decline in real wages in Japan for the twenty-fifth consecutive month in April, as inflation outstripped nominal wage increases.

The yen is the worst-performing currency among the G10 this year.

Ryuzo Himino, Deputy Governor of the Bank of Japan, said on Tuesday that the central bank must be very vigilant about the impact that currency weakness could have on the economy and inflation.

The New Zealand dollar rose 0.1% to 0.6184 US dollars, and the British pound stabilized at 1.2775 dollars.

Australian economic data showed a growth of only 0.1% in the first quarter, as high interest rates and inflation put pressure on consumer spending; however, markets were prepared for a contraction.

The Australian dollar rose in the latest trades by 0.1% to 0.6657 US dollars.

Meanwhile, emerging market currencies stabilized after a few days of volatility.

The Indian rupee recovered from a seven-week low it reached during a turbulent session on Indian markets, where election results showed that voters re-elected Narendra Modi by a much smaller margin than expected.

The Mexican peso stabilized after falling about 4% against the dollar and nearly 6% against the yen since the re-election of the leftist Morena party.

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