Dollar steady ahead of Fed's interest rate decision
* Pound falls as parliament bans another vote on same Brexit
* Dollar index little changed on day
(Updates market action, adds comment on sterling)
By Saqib Iqbal Ahmed
NEW YORK, March 18 (Reuters) - The U.S. dollar was little
changed against a basket of currencies on Monday, sticking close
to a two-week low, as caution about the American economy and
expectations for an accommodative Federal Reserve kept the
The dollar index, which tracks the greenback versus
the euro, yen, British pound and three other currencies, was
about flat on the day at 96.555. The index hit a two-week low of
96.376 earlier in the session.
The dollar has weakened in recent sessions as investors
expect the Fed to strike a dovish tone when it meets this week.
Market participants expect the central bank to keep its
benchmark overnight interest rate unchanged and stick to its
pledge of a "patient" approach to monetary policy. Soft U.S.
manufacturing data on Friday helped cement that expectation.
"The Fed will be the big news this week, and the market is
looking for them to reinforce the dovish line and continue to
hammer the point that they are here to support markets," Brad
Bechtel, global head of FX at Jefferies, said in a note.
Traders will focus on whether policymakers will have
sufficiently lowered their interest rate forecasts to more
closely align their individual rate views for the next three
years with the pledge of patience, analysts say.
Investors will also be watching for details on any plans by
the Fed to stop culling its holdings of nearly $3.8 trillion in
"With the Fed expected to reduce its forecasts for future
interest-rate rises, investors should expect this to boost
appetite for risk assets later this week," Dean Popplewell, vice
president of market analysis at foreign exchange trading firm
Oanda, said in a note.
The dollar clung to tight trading ranges against most major
Russia's ruble hit a seven-month high, supported by
stronger oil prices and interest in the country's sovereign
Sterling dropped below $1.32 after the speaker of
Britain's parliament said Prime Minister Theresa May's Brexit
deal could not be voted on again unless a different proposal was
"Today's developments don't alter our view that uncertainty
will continue to dominate over the next fortnight. We would not
advise adding to long sterling positions given the multiple
scenarios in play," said Geoffrey Yu, head of UK investment
office, UBS Wealth Management, in London.
"However, a 'no-deal' Brexit is still not our base case, and
the market seems to agree no-deal is limited to only a tail
risk, which explains why the pound has not reacted more
adversely," he said.
(Reporting by Saqib Iqbal Ahmed; additional reporting by Sujata
Rao in London; Editing by Lisa Shumaker)
First Published: 2019-03-18 02:53:45
Updated 2019-03-18 21:09:20
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