US Dollar Strengthens Ahead of Fed Decision; Yen Remains Weak
The US dollar is showing strength in early European trade as investors await the conclusion of the latest Federal Reserve meeting. Meanwhile, the Japanese yen continues to hover near its one-year low.
The Dollar Index, which tracks the greenback against a basket of six other currencies, is trading 0.1% higher at 106.612 at 04:00 ET (08:00 GMT).
Fed Decision and Powell’s Press Conference in Focus
Traders are anticipating the outcome of the latest policy-setting meeting, with the expectation that interest rates will remain unchanged. Despite a series of interest rate hikes, recent data suggests a resilient US economy, which is favorable for the dollar.
Additionally, geopolitical tensions in the Middle East and their potential impact on oil prices are seen as positive factors for the dollar. Analysts at ING have noted this in a recent report.
Investors are closely monitoring comments from Fed Chair Jerome Powell, hoping to gain insights into the future direction of interest rates. Any indications of another rate hike would be significant.
Traders Keeping an Eye on Yen Intervention
The Japanese yen has weakened against the dollar following the Bank of Japan’s decision to maintain negative interest rates. The central bank made minimal changes to its yield curve control policy, prompting speculation that aggressive foreign exchange intervention may be necessary.
Earlier this week, the Bank of Japan intervened in the government bond market to prevent a surge in yields. Despite this, the Japanese currency remains close to its one-year low.
Euro Slips Lower Ahead of Powell’s Comments
The euro has experienced a 0.1% decline against the dollar, influenced by data showing a slowdown in inflation in the eurozone. This has fueled speculation that the European Central Bank may not tighten monetary policy further.
Chinese Private PMIs Disappoint
The Chinese yuan remains under pressure as private manufacturing sector data indicates contraction. This follows a similar decline reported on Tuesday, raising doubts about China’s economic rebound.
Other currencies, such as the pound and the Swiss franc, are trading relatively flat.
