Investing.com -- The dollar was still trading sideways in early trading in Europe Tuesday, after dipping late Monday on the back of comments from the Federal Reserve’s Charles Evans suggesting that there will be no change in interest rates for over a year.
Evans, president of the Chicago Fed, told CNBC that he would be “comfortable” with interest rates staying where they are until the autumn of 2020, something he thought would help ensure that inflation returns to the Fed’s target rate of 2% after slipping in recent months.
“I can see the funds rate being flat or unchanged into the fall of 2020. For me that’s to help support the inflation outlook and make sure that its sustainable at 2% or a little above,” Evans said.
The Fed’s adoption of a looser policy stance has failed so far to result in any significant weakening of the dollar, not least because many other central banks have followed it in abandoning any plans for higher interest rates.
Overnight, the Reserve Bank of Australia had become the latest central bank to move towards an easier monetary policy. The minutes of the RBA’s last policy meeting showed that if inflation didn’t rise from its current levels, and if joblessness began to rise, then a “decrease in the cash rate would likely be appropriate”. The RBA hasn’t touched the cash rate since a 25 basis point cut to 1.50% in August 2016.
The dollar rose 0.4% against the Aussie on the news. At 04:15 AM ET, the dollar index, which measures the greenback against a basket of major currencies, was flat at 96.555, while the euro was also unchanged at $1.1307 and the British pound a fraction lower at $1.3090. In emerging markets, the Turkish lira was still under pressure after hitting a six-month low against the dollar on Monday.
The RBA’s move follows similar ones by the European Central Bank, the Bank of England and the Reserve Bank of New Zealand in recent weeks. At the weekend, Bank of Canada Governor Stephen Poloz, too, had all but ruled out any rise in rates in the foreseeable future.
The global data calendar is heavier Tuesday, presenting plenty of opportunities to gauge the success of central banks in stopping the slowdown in the global economy.
The German ZEW confidence index will be published at 05:00 AM ET (0900 GMT), while U.K. labor market data for March are due at 04:30 AM (0830 GMT).
Later in the day, U.S. industrial production data are due at 09:15 AM ET and the NAHB housing market index will be released at 10:00 AM.