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FOREX-Dollar mostly flat ahead of key U.S. economic data, Fed meeting
July 28, 2014 / 7:52 PM / in 3 years

FOREX-Dollar mostly flat ahead of key U.S. economic data, Fed meeting

* Traders eye this week’s U.S. GDP, jobs data

* Two-day Federal Reserve meeting also on calendar

* U.S. pending home sales unexpectedly fall (Updates prices, adds comments)

By Sam Forgione

NEW YORK, July 28 (Reuters) - The U.S. dollar traded mostly flat against a basket of major currencies on Monday, halting last week’s advance but still hovering near six-month highs as traders awaited a glut of economic data and policy releases.

The dollar inched lower against the euro but still traded near eight-month highs against the shared currency ahead of Wednesday’s release of U.S. second-quarter gross domestic product growth and a Federal Reserve policy announcement. Traders also eyed Friday’s report on U.S. nonfarm payrolls growth for July.

“We’re probably going to see some quiet ahead of the major risk events,” said Mark McCormick, currency strategist at Credit Agricole in New York, in reference to the slight moves in major currencies.

Traders are watching the Fed closely for hints of a more hawkish monetary policy after a two-day policy meeting ends on Wednesday. Economists forecast U.S. GDP grew 3 percent in the second quarter after a sharp contraction of 2.9 percent in the first quarter, and expect U.S. employers to have added 233,000 jobs in July, according to Reuters polls.

Stronger-than-expected U.S. data on services sector activity on Monday had little impact on major currencies. Financial data firm Markit said its preliminary services Purchasing Managers Index was 61.0 in July, unchanged from June and above expectations for a reading of 59.8.

The National Association of Realtors said Monday that contracts to buy previously owned U.S. homes unexpectedly fell in June. NAR’s Pending Home Sales Index, based on contracts signed last month, fell 1.1 percent to 102.7 and confounded economists’ expectations for a 0.5 percent gain.

The weakness could have also kept the dollar from rising given the importance of housing on the U.S. economy, said Eric Viloria, a currency strategist at Wells Fargo Securities in New York.

The euro last traded 0.03 percent higher against the dollar at $1.3433, just above an eight-month low of $1.3421 touched on Friday. The dollar last traded flat against the Japanese yen at 101.865 yen, and was down 0.03 percent against the Swiss franc at 0.90425 franc.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last flat at 81.030. U.S. government bond yields edged higher after dropping on Friday, with the benchmark 10-year U.S. Treasury note down 6/32 in price to yield 2.49 percent.

Analysts said the rouble fell on concerns over the impact of new European sanctions against Moscow. The dollar was last up 1.11 percent against the Russian currency to trade at 35.52 roubles.

“If these sanctions get more aggressive ... it has the potential to have a catastrophic impact on the Russian economy,” said McCormick of Credit Agricole. (Reporting by Sam Forgione; Editing by Nick Zieminski and James Dalgleish)

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