The dollar rose in tight ranges against the euro and the yen and American equities were little changed as traders await the second of the three crucial central bank meetings within a week that will determine direction in global markets.
Last Thursday the European Central Bank expanded its accommodative policies by more than expected adding to its quantitative easing purchases and pushing rates further into negative territory.
The initial market response on Thursday which had added 1.6 percent the value of the euro against the dollar, began to erode on Friday and that slippage continued today. The euro finished at 1.1105, 0.7 percent down from Thursday's 1.1177 close.
The Yen also has seen minor weakening from Thursday's close at 113.19. On Friday it drifted lower to 113.86 and kept that today closing at 113.80.
The Federal Reserve begins its two day meeting tomorrow and issues its policy statement at 2:00 pm on Wednesday followed by Chair Janet Yellen’s news conference at 2:30 pm in Washington.
The probability of a rate move on Wednesday is less than 10 percent judging by what is priced into the Fed Funds futures. The chance for an increase at the June meeting has risen to about 50 percent from less than 2 percent a month ago. Improving U.S data, stabilizing oil prices and relatively quiet in China have helped the concerns over potential U.S and global recessions recede.
The S&P 500 dropped 0.1 percent closing at 2019.64, after falling as much as 0.5 percent. The index was at its highest finish this year on Friday as markets reassessed the European Central Bank stimulus measures. The Dow gained 0.09 percent to 17,229.13.
The Bank of Japan will meet on Thursday, no new policy initiatives are anticipated.
Chief Market Strategist
WorldWideMarkets Online Trading