US dollar slips against the euro


New York - The dollar slipped against the euro Monday despite bearish comments from Europe and amid expectations that the Federal Reserve will keep policy on course in its two-day meeting opening Tuesday.

The euro-dollar rate remained within its recent narrow range, showing little impact from a fresh round of sanctions announced by the US and the European Union against Russia, aiming to press Moscow to stop menacing Ukraine.

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Graphic: renjith krishnan

The trade also seemed unperturbed by warnings from France's central bank that the eurozone faces a disinflation threat, and from the Bundesbank that the German economy will see a “noticeable” slowdown this quarter.

“Low inflation does not mean deflation,” said Bank of France Governor Christian Noyer.

But he underscored that very low inflation was a big problem, and part of the cause was the euro's strength.

The big challenge for the 18-nation eurozone was “the risk of inflation which is too weak for a lasting period,” he said.

No policy surprises are expected from the Fed in its monetary policy review on Tuesday and Wednesday: another $10 billion cut to bond purchases is presumed, as is an unchanged dovish stance on inflation.

The yen meanwhile fell against the euro and the dollar, ahead of a Bank of Japan policy meeting on Wednesday.

With Japan's inflation number appearing stronger last week, the BoJ could be reticent to further ease policy. - Sapa-AFP

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