WASHINGTON (dpa-AFX) - The U.S. dollar traded above the unchanged line on Monday, as traders largely stayed cautious ahead of interest rate decision from the Federal Reserve, due next week.
Before that, the European Central Bank is scheduled to announce its monetary policy this Thursday (July 25).
Speculation that the Fed will resort to steep reductions in interest rates to support economic expansion pushed the greenback down in some of the recent sessions.
Comments by the New York Fed President John Williams last week that hinted at a large interest rate cut at the FOMC meeting later this month took some shine off the currency, but subsequent remarks from St. Louis Fed President James Bullard tempered hopes for steeper cuts in rates and pulled the dollar off lower levels.
The dollar index advanced to 97.29, gaining about 0.15%.
Against the euro, the dollar was up 0.13%, at 1.1207, recovering from an early low of 1.1234.
In European economic news, Germany's finance ministry warned that the weakness in the industrial sector and exports is set to last longer, mainly due to global risks such as the trade tensions.
'Leading indicators and falling orders indicate a persistently weakened industrial economy,' the ministry said in its latest monthly report.
Against British pound sterling, the greenback rose to 1.2476, gaining 0.22%.
Survey data from IHS Markit showed British households' expectations towards future finances remained positive in July. The headline household finance index rose for the second straight month in July, to 44.3 from 43.9 in June. The score signaled the weakest level of pessimism among households towards their finances since January.
Meanwhile, the National Institute of Economic and Social Research, or NIESR, said in a report that the UK economy may have already entered a recession and the outlook beyond October is very murky with the possibility of a severe downturn in the event of a disorderly no-deal Brexit.
The think tank said there is one-in-four chance that the economy has already entered a technical recession.
On the assumption that a no-deal Brexit is avoided, the economy is forecast to grow 1.2% this year, but this was revised down from 1.4% projected previously.
The yen weakened to 107.88 a dollar, giving the greenback a gain of about 0.15%.
The dollar was up 0.1% against the Aussie at 0.7036 and up marginally against Swiss franc, at 0.9821. Against the loonie, the dollar strengthened to 1.3116, recording a gain of about 0.44%.
A rate cut by the Federal Reserve next week looks imminent.
CME Group's FedWatch Tool currently indicates a 75.5% possibility for a 25 basis-point rate cut at the central bank's meeting at the end of July.
There are expectations that the central bank will likely pursue further cuts in the future given the slowing global growth and trade uncertainty.
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