Meagre gains for dollar
before central bank speeches
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[June 26, 2017]
By Patrick Graham
LONDON (Reuters) - Financial investors'
lack of faith in another rise in U.S. interest rates this year kept the
dollar near one-week lows on Monday at the start of a week packed with
speeches from Federal Reserve and other senior central bank officials.
A third day running of higher oil prices had investors buying a number
of major currencies including the dollar against the yen in morning
trade in Europe <JPY=> <EURJPY=> in the hope that crude will hold
inflation down less.
Sterling <GBP=> recovered more ground as Prime Minister Theresa May
sealed the support she needs to win a vote this week on her minority
government's program, helped by a shift by some at the Bank of England
toward raising interest rates.
But markets so far are loathe to buy the Fed's own line that it will
raise U.S. rates once more before the end of 2017 and another three
times next year. Even with a blip higher in morning trade, 5- and
10-year Treasury yields are up to 45 basis points below highs hit in
March. <US10YT=RR> <US5YT=RR>
![](http://archives.lincolndailynews.com/2017/Jun/26/images/ads/current/Bonanza_sda_072214.png)
The dollar traded 0.15 percent stronger at $1.1176 per euro <EUR=> and a
third of a percent higher at 111.72 yen by 1115 GMT.
"Market expectations are for a lot less (on rates) than what the Fed say
they are going to deliver ... so oil's forming a base this morning has
supported Treasury yields and the dollar," said Sam Lynton-Brown, a
strategist with BNP Paribas in London.
"(But) for any rise in U.S. yields and the dollar to be sustained we are
likely to have to see a more convincing pickup in U.S. economic data."
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![](../images/062617pics/busine45.jpg)
Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and
Chinese 100-yuan banknotes are seen in a picture illustration shot
January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/pacesetter_lda_041116.png)
Fed chair Janet Yellen makes a hotly awaited speech in Europe on Tuesday
but most analysts were skeptical of the chances of her driving the
greenback sharply higher.
"The market continues to call the Fed's bluff on its intentions to
change rates. I don't think anything Yellen can say this week will
change that," said Stephen Gallo, head of European FX strategy with Bank
of Montreal.
"We were saying buy dips in cable and euro (against the dollar) last
week. We still look for the same this week."
Yellen is preceded by European Central Bank chief Mario Draghi on
Monday, watched for signs he is ready to let the ECB move more forcibly
toward a reduction in emergency stimulus for the economy this year that
should support the euro.
Some say steadier oil prices would help Draghi sign up behind the move
toward normalizing policy being advocated by Germany's Bundesbank, but
so far he has been reticent, worried that, not for the first time since
2008, the euro zone's recent pickup may prove less durable than hoped.
(Additional reporting by Shinichi Saoshiro in TOKYO; Editing by Jeremy
Gaunt)
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