Dollar mixed Monday
Greenback struggles against euro and yen, but gains on the pound, as investors wait for monetary policy news.
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| Click on the chart to see other currencies. |
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| Click on the chart to see other currencies. |
NEW YORK (CNNMoney.com) -- The dollar was mixed Monday against other major currencies in advance of monetary policy announcements from a number of central banks due out later in the week.
The euro rallied to $1.2858 Monday, up 0.7% from $1.2770 late Friday. And the dollar fell to ¥89.60, down 0.5% from ¥90.02.
Meanwhile, the pound sank 1.6% against the dollar to $1.4237 from $1.4473 late Friday.
The European Central Bank and the Bank of England are both due to give updates in their monetary policy on Thursday. The ECB's key lending rate is currently set at 2%, and the Bank of England's key rate currently sits at 1.5%.
The Bank of England is largely expected to cut its key lending rate, according to Sacha Tihanyi, currency strategist at Scotia Capital. When a country lowers its key lending rate, making funding more available, the currency generally loses value.
London-based bank Barclays got a credit downgrade by Moody's, according to Tihanyi, indicating further financial system weakness. "Financial sector concerns have played a really large part in currency moves lately," he said.
The European Central Bank is expected to keep its key lending rate on hold. ECB president Jean-Claude Trichet has indicated several times in recent weeks that the its next critical monetary policy announcement is in March, said Tihanyi, hinting that the ECB will not be looking to lower rates at this week's meeting.
The Federal Reserve, the U.S. Central bank, currently has its key lending rate set at a target range of zero percent to 0.25%.
In the middle of a financial crisis, with market volatility across the board and governments intervening with unprecedented regularity, Tihanyi said that "it is not the smaller data releases that are moving markets."
The ISM Manufacturing report released Monday only caused a temporary blip in currency prices. But major economic readings - like the government's unemployment report due out Friday - would likely push currency prices around, according to Tihanyi, especially if the reading was a surprise.
Other developments on a larger scale, according to Tihanyi would include developments related to bank bailout funding. 
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