The dollar index gained 0.18% to 104.56, the euro slid 0.33% to $1.0821, while dollar/yen was up 0.13% at 153.995, reversing an earlier decline of 0.49% to 153.04
The dollar held steady on Monday as traders braced for a slew of market events featuring midweek policy decisions by the Fed, Bank of Japan and Bank of England, and what could be a pivotal U.S. employment report for the Fed on Friday.
The yen was little changed following the Japanese currency’s strongest weekly rally since late April on the back of shifting interest rate expectations and a stock market sell-off.
The dollar index gained 0.18% to 104.56. The euro slid 0.33% to $1.0821.
Dollar/yen was up 0.13% at 153.995, reversing an earlier decline of 0.49% to 153.04.
Markets have been focused on the jump in the yen over the past week, with rising speculation of a BoJ interest rate hike this week helping boost the currency, along with the spectre of BoJ intervention after several rounds of official yen buying in recent weeks.
Win Thin, Brown Brothers Harriman’s global head of market strategy, said in a client note that the yen will likely struggle to gain further upside momentum, with the Bank of Japan likely to deliver a dovish hike at its meeting on Wednesday.
The U.S. Federal Open Market Committee is widely expected to leave rates unchanged this week, but to reduce them by a quarter point at the following meeting in September.
While the FOMC does not meet in August, Fed chair Jerome Powell could use the Jackson Hole gathering of central bankers in late August to prepare the market for a rate cut. By then more data on inflation and Friday’s July employment report will be available for policy makers to weigh conditions for a September cut.
The market does not have much conviction right now. It does not have much conviction, because everybody is reading from same song book, what would be called a ‘dovish hold’ by the Fed, according to Marc Chandler, chief market strategist at Bannockburn Global Forex.
