At the beginning of a week full with data releases and central bank rate setting meetings, including those by the Bank of England and the Federal Reserve, the dollar increased on Monday, reclaiming some of the territory it had lost earlier in the month.
The immediate term attention was on the flash GDP and inflation figures for the euro zone as well as the specifics of the Japanese Ministry of Finance’s involvement, both of which were due later on Monday.
The dollar increased 0.57% versus the Japanese yen to 148.2, the euro fell 0.5% to $0.9919, and sterling fell 0.56% to $1.1549 as the currency’s earlier-in-the-month weakness persisted.
On rising predictions that the U.S. Federal Reserve will announce a less aggressive future programme of rate hikes at its policy meeting that begins on Tuesday, the dollar is headed for a monthly loss in October — its first since May and only the second this year.
However, this story lost its momentum by the end of last week, and it still had trouble on Monday. “The markets have been hinting at a Fed monetary policy reversal. Given how resilient the economy has been and in particular how high inflation has been, I believe it is premature “the Commonwealth Bank of Australia’s Carol Kong, a currency strategist (CBA).