USD drops on rate speculation

USD drops on rate speculation

Story link: USD drops on rate speculation

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The US dollar weakened Monday in anticipation of Tuesday’s meeting of the Federal Reserve, when the Fed is widely expected to cut US interest rates, possibly to as low as 0.25 percent.

Also hurting the greenback was the news that the New York Fed’s general economic index fell from minus 25.4 in November to minus 25.8 this month, showing that manufacturing activity in the region is still contracting.

Additionally, the US Treasury said that international demand for long-term US assets weakened in October, when total net purchases of long-term assets were at $1.5 billion, down from $65.4 billion in September.

At around 1:30 p.m. in New York, the dollar traded at $1.3669 to the euro while the yen was at ¥90.76 to the greenback.

The pound gained ground on both the euro and the US dollar even though Rightmove (LSE: RMV) reported that the average asking price for a house in the UK dropped 2.3 percent in December to bring the decline in house prices to 10 percent since their peak in May.

The online property search service said that it expects house prices to fall another 10 percent next year.

In early afternoon trade in New York, the pound traded at 89.4p to the euro while it took $1.5289 to buy a pound.

Earlier in the session, the pound weakened after Conservative Party leader David Cameron said he is not in favor of government action to support the pound.