Financial Insights

Dollar holds firm as Fed decision approaches; yen falls after LDP victory

The dollar was trading at a high of nearly two and a half weeks with major competitors as US inflation accelerated cases of previous Federal Reserve rate hikes.

The yen’s appreciation was nearly a week and a half after Japan’s safe currency weakened as the ruling party’s good performance in the weekend elections eased political instability. The dollar index, which measures the greenback of 6 competitors, remained almost unchanged at 94.166, hovering near Friday’s high of 94.302, a level not seen since October 13.

US currency rose 0.13% from the end of last week to buy 114.175 yen. Above 114.41, it will be the strongest value since October 20th, when it reached a record high of 114.695.

Fumio Kishida, the ruling Liberal Democratic Party of Japan, was the overwhelming majority in the general election on Sunday, contrary to expectations.

“A slight depreciation of the yen is causing political unrest to decline this morning,” said Shinichiro Kadota, chief foreign exchange strategist at Barclays in Tokyo.

“The Fed remains the bigger impetus for the future dollar.”

Monetary policy in the United States and elsewhere is in the limelight this week, and the US Federal Open Market Committee cuts stimulus measures on Tuesday. I will announce it.

The government’s personal consumption index (the Fed’s recommended inflation index) rose 4.4%, confirming market expectations for a rate hike in the middle of next year.
Following the data, federal funds rate futures, which reflect short-term interest rate expectations, will be priced 90% of quarterly point tightening by June 2022, taking into account further interest rate hikes by December.

The Reserve Bank of Australia also made a policy decision on Tuesday, questioning the central bank’s claim that interest rates will not rise until 2024 last week.

The Bank of England announced its monetary policy decision on Thursday, and the market considered whether monetary authorities would raise rates at a meeting.

On the other hand, the euro remained almost unchanged at $ 1.15575, staying close to Friday’s low of $ 1.1535, the lowest since October 13.

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