18 Sep 2023
The Dollar remained close to a six-month high on Monday as traders focused on rate decisions this week from the Federal Reserve, Bank of England and Bank of Japan.
The Euro was flat against the greenback at $1.0658, whilst the Japanese Yen was trading at 147.69 to the Dollar on a national holiday in Japan.
The Dollar index – measuring the currency against six rivals – edged up to 105.32. The index increased for its ninth consecutive week last week as the US economy still showed strength. Last Thursday, it hit 104.53, the highest since the middle of March.
"In the grand scheme of things, we're quite positive on the Dollar," according to Alvin Tan, head of Asia FX strategy at RBC Capital Markets. "The US economy is outperforming both Europe and Asia, especially China."
Traders are eyeing this week's central bank decisions, starting with the Fed, which is expected to keep rates on hold in the range of 5.25% to 5.5% on Wednesday.
The Bank of England is expected to hike rates by 25 basis points to 5.5% on Thursday, in what may be its last increase.
At the time of writing, the Pound was trading down 0.08% at $1.2372. UK inflation data is due to be published on Wednesday and may likely move Sterling ahead of the Bank of England's decision.
Whilst traders forecast the Bank of Japan to keep rates on hold at -0.1% on Friday, they will look for policy outlook indications following Governor Kazuo Ueda's comments fuelling rumours of a shift away from ultra-loose policy.
Commonwealth Bank of Australia currency strategist Carol Kong forecasts the Yen to be volatile in the run-up to the meeting.
"In terms of the direction of travel, Dollar/Yen can definitely track higher... particularly if Governor Ueda sounds dovish and dashes hopes of policy tightening at the upcoming meeting," she stated.