Major currencies remained in narrow trading ranges on Monday, kicking off a pivotal week dominated by central bank decisions and corporate earnings. The dollar faced downward pressure as oil prices and Treasury yields retreated. Brent crude futures dipped over 1% to approximately $115 per barrel, following a Reuters report about Qatari mediators working to ease regional tensions in coordination with the US.
US Treasuries maintained gains from a recent safe-haven rally, with inflation concerns persisting due to elevated oil prices. A tech-led selloff, driven by AI-related worries, prompted a shift away from risk assets. The yield on 10-year US notes fell to 4.974%, while 30-year notes were at 5.299%, near one-month lows. Ray Attrill, head of FX strategy at National Australia Bank, noted that the US bond market was influencing broader dollar performance, citing compressing yield differentials between the US and other G10 majors.
The euro gained 0.16% against the dollar to $1.122, supported by relief that France avoided a Moody's downgrade despite social unrest. Sterling rose 0.1% to $1.3385. The dollar index weakened slightly to 101.64. The Australian dollar traded at $0.7030, down 0.04%, while the kiwi strengthened 0.06% to $0.572. The Japanese yen remained steady at 156.920 per dollar.
Five major central banks are set to take center stage later in the week, with the US Federal Reserve, European Central Bank, and Bank of Japan expected to keep rates unchanged. Markets anticipate potential hikes from the Bank of Canada and the Reserve Bank of New Zealand. Chris Weston, head of research at Pepperstone, emphasized that forward guidance could be more impactful than the decisions themselves, shaping expectations for future meetings and potentially altering the forward rates curve.
Gold prices saw a slight decline, with spot gold trading at $3,986.16 per ounce. In cryptocurrencies, bitcoin fell 0.6% to $79,925.84, while ether dropped 1.1% to $2,317.33.