Dollar Approaches 5-Week High Amid Expectations for Tight Monetary Policy
The Japanese yen is declining, the US dollar is approaching a five-week high versus other major currencies, and investors are betting more on the Federal Reserve keeping its monetary policy tight.
Crucial Information: US Consumer Price Data
The release of US consumer pricing data on Tuesday will be the focus of this week’s attention since it will have a big influence on perceptions of the Fed’s monetary policy.
New Japanese Central Bank Governor’s Effects
As traders reevaluated their expectations of the policy attitude of Kazuo Ueda, the possible next governor of the Japanese central bank who is due to be officially named on Tuesday, the dollar climbed 0.7% on Monday to 132.48 yen. Former Bank of Japan board member Ueda claimed in an interview that the BOJ should keep up its current ultra-easy policy.
constant exchange rates between the euro and the pound and the dollar
The euro and pound both held stable versus the dollar, trading at $1.0685 and $1.206 respectively. The US dollar index, which compares the US currency to six significant rivals, is at 103.61 at the moment.
Federal Reserve Expectations for Tight Monetary Policy
A positive result for the US consumer price index would raise hopes that the Federal Reserve will adopt a more restrictive monetary policy, which might boost the value of the dollar. The US economy is now doing well, as seen by the considerably better than anticipated jobs statistics issued in early February, which lessens the risk for the Fed in maintaining high interest rates.
Forecast for Interest Rates
Compared to the present goal rate of 4.5-4.75%, money markets expect that the top of US interest rates will be slightly below 5.2% around July.
Swiss Francs decline against the dollar.
The dollar briefly fell to 0.9220 Swiss francs before rising to 0.9237 Swiss francs, which is a marginal gain for the day.