Forex – Dollar lower as central bank speakers eyed

ECB President Mario Draghi, speaking to university students in Lisbon, said super low rates create jobs, foster growth and benefit borrowers, ultimately easing inequality, it said.The euro fell earlier this month after the European Central Bank said policymakers had not discussed scaling back its massive bond-buying programme.Federal Reserve policy maker John Williams made the case on Monday for further gradual increases in interest rates, saying he expects inflation to rise to the central bank’s 2 per cent target next year as unemployment edges lower.”Draghi pouring water on expectations of reducing monetary stimulus, that saw the euro then start to weaken”, said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in NY. Looking at this week’s calendar, Fed Chair Janet Yellen is due to give a speech at an event in London on Tuesday while the U.S. administration will attempt to push the healthcare bill through Congress before the July 4 Independence Day.”Gradually raising interest rates to bring monetary policy back to normal helps us keep the economy growing at a rate that can be sustained for a longer time”.Those expectations helped the USA dollar gain against a basket of major currencies.Despite lower Treasury yields, the dollar extended overnight gains and was a shade higher at 111.960 yen after briefly rising to a one-month peak of 112.075.Meanwhile, the S&P 500 Futures traded 0.27 percent higher at 2,441.75 by 12:40GMT, while at 12:00GMT, the FxWirePro’s Hourly Dollar Strength Index remained neutral at -55.44 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).The risk that Ms Yellen could tweak her outlook in a more dovish direction kept traders on tenterhooks and limited the United States dollar’s gains. On Thursday, the final estimate for U.S. first-quarter gross domestic product is expected to confirm the world’s biggest economy grew 1.2 percent and on Friday, the core PCE for May, Yellen’s preferred inflation measure, may print at zero. Recent data on retail sales, manufacturing production and inflation have given pause and housing data has been mixed. Yet financial markets have not tightened as much as some expected, with equity indexes regularly logging new records and the 10-year Treasury bond rate declining since March. “Traders are still split on what the Fed is going to do”.While investors seem to have come to a consensus view that the US dollar rally is coming to an end, Credit Agricole has offered a contrarian take: There is room for the greenback to strengthen. The dollar was last down 1.3 percent against the Brazilian real at 3.2998 reais.