🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

Dollar drifts higher; BOE continues raft of central bank meetings this week

Published 06/19/2023, 02:09 AM
© Reuters.
EUR/USD
-
GBP/USD
-
USD/JPY
-
AUD/USD
-
USD/CNY
-
DXY
-

Investing.com - The U.S. dollar edged higher in thin holiday-affected trade Monday, as traders digested the impact of last week’s central bank decisions, with a speech by Fed Chair Jerome Powell looming large.

At 02:00 ET (06:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 101.935, just above its recent one-month low, although activity is likely to be limited with the U.S. markets closed on Monday for the Juneteenth holiday. 

Powell to testify before Congress

The U.S. Federal Reserve led the parade of senior central banks meeting last week to discuss monetary policy, and, as expected, paused its year-long rate-hiking cycle to assess its impact on inflation and the country’s economic outlook.

The Fed also hinted at the likelihood of further rate increases ahead, with consumer prices still double its 2% target, but indicated the importance of upcoming economic data backing up these moves.

With this in mind, data on the U.S. housing market as well as initial jobless claims and the current account will be studied carefully this week, as well as Powell’s two-day semi-annual congressional testimony before both Congressional chambers.

Beyond Powell, several other Fed officials are also set to talk this week.

Euro near one-month high, yen weak

Elsewhere, EUR/USD fell 0.1% to 1.0935, close to a one-month peak, while USD/JPY fell 0.2% to 141.52, with the yen bouncing off a near seven-month low versus the dollar, having fallen 1% on Friday. 

The European Central Bank raised interest rates by 25 basis points on Thursday and left the door open to more hikes, while the Bank of Japan rounded off the week by remaining the major central bank outlier, keeping its ultra-easy monetary policy.

Bank of England up next

GBP/USD edged higher to 1.2824, with the release of the consumer price data on Wednesday likely to be the main driver of sentiment ahead of Thursday’s Bank of England meeting.

The BoE is widely expected to raise its main interest rate to 4.75% from 4.5% on Thursday, with the May CPI number expected to confirm that inflation in the U.K. remains more than four times above the central bank’s 2% medium-term target.

"We still think the rate of inflation is going to come down, but it's taking a lot longer than expected," Bank of England Governor Andrew Bailey said last week, after data showed that basic wages in the three months to April were 7.2% higher than a year earlier. 

Elsewhere, AUD/USD fell 0.2% to 0.6866, while USD/CNY rose 0.3% to 7.1468, with the yuan retreating as markets priced in a potential cut in the benchmark loan prime rate on Tuesday.

The People’s Bank of China cut two interest rates last week, and is now widely expected to cut its benchmark rate as it attempts to boost its flagging economy.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.