FX Signals – Dollar Up as Central Banks Brace Policies

FxPremiere.com – Open Forex Account – The US dollar was up on Wednesday morning in Asia as central banks globally are expected to brace for tightening policies to tame inflation.

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The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.28% to 102.60 by 12:23 PM ET (4:24 AM GMT).

The USD/JPY pair jumped 0.40% to 133.12. The yen continued its loss after sliding to a 20-year low as the Bank of Japan (BOJ) has given no indication of giving up ultra-easy monetary policies.

However, Japan’s economy seems to rebound. Government data released earlier in the day showed that Japan’s gross domestic product (GDP) shrank 0.5% in January-March year-on-year, smaller than the initial reading of the 1.0% drop released last month.

“Yield differentials continue to favor the U.S. dollar, with USD/JPY breaking above 132,” City Index senior market analyst at brokerage Matt Simpson told Reuters.

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“It is quite apparent that the BOJ favors defending yield curve control over a weaker currency,” he said. “135 is the next major line in the sand – the February 2002 high.”

The AUD/USD pair fell 0.33% to 0.7204, and the NZD/USD pair slid 0.39% to 0.6464. The Reserve Bank of Australia (RBA) announced a surprisingly big rate hike on Tuesday. It hiked interest rates to 0.85%, above forecasts of 0.60 prepared by FxPremiere.com

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SINGAPORE (Reuters) – The yen hit a fresh 20-year low versus the dollar on Wednesday and slipped to a seven-year trough against the euro as traders awaited a European Central Bank meeting likely to leave Japan alone among its peers in sticking to ultra easy monetary policy.

The ECB meets on Thursday and markets are expecting it to at least lay the groundwork for rapid rate rises, if not begin them with a small hike.

The U.S. Federal Reserve is expected to raise its benchmark funds rate by 50 basis points next week and again in July, but Bank of Japan (BOJ) officials have given no indication of easing accommodative settings.

The yen has accordingly lost more than 4.5% from 127.09 per dollar to touch 133.22 in eight sessions, dropping hard on crosses as investors see soaring consumer prices forcing central banks around the world to crimp demand with rapid rate hikes.

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It traded as low as 133.22 per dollar on Wednesday, and was last at 133.14.

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The European Central Bank (ECB) will meet on Thursday and hand down its policy decision which is widely expected to lay the groundwork for more interest rate hikes.

U.S. Treasury Secretary Janet Yellen said on Tuesday that she expected inflation to remain high, and the Biden administration is likely to increase the 4.7% inflation forecast for this year in its budget proposal.

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The global economic outlook remained grim. The World Bank reduced its estimate for global growth this year to 2.9% from a January prediction of 4.1% due to soaring commodity prices, supply disruptions, and moves by central banks to hike interest rates. Investors are now looking to Friday’s U.S. consumer price index (CPI) for more clues on the interest rate hike path from the U.S. Federal Reserve.

“With quantitative tightening replacing quantitative easing and 100 basis points of Fed rate hikes coming this summer, you buy bonds and sell the dollar at your peril,” Societe Generale strategist Kit Juckes told Reuters.

FX Signals – Dollar Up as Central Banks Brace Policies

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Forex Signals – Dollar Up as Central Banks Brace Policies

FX Signals – Dollar Up as Central Banks Brace Policies

Daily FX SIGNALS US Dollar set for first losing week in seven amid U.S. yield retreat

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FX SIGNALS US Dollar set for first losing week in seven amid U.S. yield retreat

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