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FOREX-Dollar slips from two-week high; Bank of England meeting in focus

ForexMay 06, 2021 10:06
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* Dollars slips off two-week high
* Aussie dollar falls overnight
* Sterling steady before BoE meeting
* Graphic: World FX rates

LONDON, May 6 (Reuters) - The dollar fell from a two-week
high on Thursday, while traders focused on economic data that
may provide clues on when the Federal Reserve will dial back
monetary stimulus and a Bank of England meeting.
The dollar has rebounded from a one-month low over the past
week, swung by U.S. economic data that has largely supported the
case for a rapid recovery from the pandemic. Global currency markets were generally calm as European
markets opened. The Australian dollar fell sharply overnight
when China said it would stop its economic dialogue with
Australia, but the currency had recovered to trade close to flat
on the day as European markets opened AUD=D3 . At 0711 GMT, the Australian dollar was up 0.1% versus the
U.S. dollar at 0.77530, having hit as low as 0.7701 overnight
AUD=D3 .
The New Zealand dollar also dropped, but saw a similar
recovery NZD=D3 .
"The announcements of the formal suspension of the economic
dialogue between China and Australia should not have a lasting
impact on markets given the already strained relationship
between the two ahead of the event," wrote ING strategists in a
note to clients.
The dollar index was a touch lower, down 0.1% on the day at
91.152 =USD . It hit as low as 90.422 one week ago and has
since strengthened, helped by end of month flows and comments by
U.S. Treasury Secretary Janet Yellen's comments saying interest
rates may need to rise to prevent the American economy from
overheating. On Wednesday, Federal Reserve speakers downplayed the risks
of higher inflation. "The united dovish message should continue to help dampen
upward pressure on US yields and the US dollar ahead of what is
expected to be another blockbuster employment report on Friday
with non-farm payrolls expected to rebound by close to one
millions jobs as the economy to reopens," wrote MUFG currency
strategist Lee Hardman in a note to clients.
Sterling was steady against the dollar at $1.3909 GBP=D3
and down 0.2% against the euro at 86.425 pence per euro
EURGBP=D3 ahead of the Bank of England meeting at 1100 GMT.
The Bank of England will say that Britain's economy is
heading for a much stronger recovery this year than it
previously expected and it might start to slow its pandemic
emergency support. "The central bankers have every reason to sound optimistic,"
wrote Thu Lan Nguyen, FX and EM analyst at Commerzbank.
"What is relevant for Sterling in this context is whether
the central bank is already sufficiently confident about
economic prospects to give the first indication of a reduction
of its expansionary degree."
Investors were also paying attention to elections in
Scotland which could herald a volatile political showdown over
new independence referendum. The euro was up 0.2% against the dollar at $1.20230
Strong domestic demand for consumer goods propelled a bigger
than expected jump in German industrial orders in March,
suggesting that manufacturers in Europe's largest economy will
support a recovery in the second quarter. The Canadian dollar was near three-year highs, helped by oil
price gains and the Bank of Canada's recent shift to more
hawkish guidance CAD=D3 . The Norwegian crown was slightly stronger, up 0.2% against
the euro, with the pair changing hands at 10.0125 EURNOK=D3 .
The Norges Bank's rate announcement at 0800 GMT is not expected
to see rates change.
In cryptocurrencies, ether traded around $3,440 after
reaching a record high of $3,559.97 on Tuesday, skyrocketing
nearly 800% this month ETH= .
Bitcoin was down around 1.1% at $56,818, still below the
all-time high of $64,895.22 it reached in April BTC=BTSP .
The meme-based virtual currency Dogecoin soared on Wednesday
to an all-time high, extending its 2021 rally to become the
fourth-biggest digital coin. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates

FOREX-Dollar slips from two-week high; Bank of England meeting in focus

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