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The US dollar weakened on Monday on expectations the Federal Reserve will leave interest rates unchanged after its policymakers meet this week, while oil prices rose from multi-week lows.
A growing belief that the Bank of Japan, which also meets this week, will stop short of the dramatic action needed to weaken its currency also weighed on the dollar.
US stocks cut early gains to end flat, with a rise in big bank stocks offsetting a drag from Apple.
Fed, BOJ policy meet
Weak recent US data has boosted bets that the Fed will skip the chance to raise rates at this week’s meeting, but investors will listen closely to Chair Janet Yellen’s speech on Wednesday for any hint that the central bank could hike as soon as December.
Conflicting reports on what the BOJ might do have stoked market uncertainty. Speculation is rife that the BOJ will change tack in favour of a policy mix that would add stimulus while protecting banks from problems generated by negative interest rates on deposits.
Both central bank meetings are scheduled for Tuesday-Wednesday.
“The market is of the mindset that Tokyo is at or near the end of its monetary rope,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.3 per cent at 95.858 after hitting a 15-day high of 96.108 on Friday. The dollar hit a six-day low against the yen of 101.59 yen .
The Dow Jones industrial average slipped 3.63 points, or 0.02 per cent, to 18,120.17, the S&P 500 lost 0.04 point to 2,139.12 and the Nasdaq Composite dropped 9.54 points, or 0.18 per cent, to 5,235.03.
“There was money looking for a home and was being put into the (equity) market this morning with the anticipation the Fed's not going to do anything,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
“But there was some discussion that perhaps the statement that comes from Fed may have a hawkish tone. If it's too hawkish, we get almost the equivalent of a rate increase.”
Apple shares shed 1.2 per cent after registering huge gains last week. The stock was the biggest drag on the three major US indexes.
The rate-sensitive S&P financial index rose 0.5 per cent.
MSCI’s all-country world stock index was up 0.5 percent, while European shares closed up 1 per cent.
Crude oil
Oil prices rose after Venezuela said OPEC and non-OPEC producers were close to a deal to stabilise the market.
Brent crude futures gained 0.4 per cent to settle at $45.95 a barrel and US crude gained 0.6 per cent to settle at $43.30, off highs earlier in the day. Last week, Brent hit a two-week low and US crude fell to a five-week low.
In the US bond market, yields dipped as traders booked profits ahead of the Fed and BOJ meetings.
Benchmark 10-year Treasury notes were up 2/32 in price for a yield of 1.694 per cent, down 0.7 basis point from late on Friday.
In the metals market, gold prices rose as the dollar slipped. Spot gold was up 0.3 per cent at $1,313.39 an ounce.
There was little discernible market reaction to weekend bombings in New York City and New Jersey and a stabbing at a Minnesota shopping mall.
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