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Forex Dollar close to 2 month top after U.S. GDP boost yield appeal

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The dollar apprehended firm on Monday, staying near a two month soaring against a basket of currencies, better than predicted U.S. GDP data last week . The U.S Federal Reserve is widely predicted to drop interest rates for the first time in more than a decade this week, but such a move is being widely seen as preventative one to protect the economy from worldwide uncertainties and pressures.

What everyone is fascinated in right now is whether the U.S will enter a full rate cut cycle. The GDP figures were a little stronger than predicted, putting a end to the view of the U.S inflowing a long easing cycle, stated by Kyosuke Suzuki, director of forex at Societe Generale. The dollar index stood little mispresented at 97.968 after having hit a two month high of 98.093 on Friday. The U.S gross domestic product augmented at a 2.1% annualized rate in the second quarter, above prediction of 1.8%, as a gush in consumer spending  rounded some of the drag from declining exports and a smaller inventory build.

The Data pushed up U.S bond yields and cemented predictions that the Fed will go for a smaller interest rate .While U.S money market futures price in a total of almost 75 basis point of cut by the end of the year to 1.5-1.75 percent, that still foliage the dollar with the highest interest rates among the major currencies. The European Central Bank signaled last week that it is likely to drop interest rates into negative and approve more slackening measures in September to boost up the slumped the Euro zone economy.

The euro stood at $1.11315, almost dreary in Asia and not far from Thursday’s low of $1.1101, a furrow since may 2017. Against the yen, the dollar traded at 108.62 yen, down faintly from late U.S levels on Friday, when it had risen to a two week crest of 108.83 yen, A head of the Fed, the bank of Japan is starting its two day procedure meeting later on Monday. Market players predict the BOJ to send dovish messages and it could try to put a resemblance of easing by changing its assistance but desist from rate cuts and other prime policy moves prearranged its lack of policy ammunition.

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