Monday, 30 July 2018 12:00

Dollar slips ahead of busy week for central banks

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The U.S. dollar weakened against a basket of its major rivals on Monday, as traders prepared for a week filled with monetary policy updates from Japan, the U.S. and the U.K.

The ICE U.S. Dollar Index DXY, -0.16%[1]  was down 0.2% at 94.494, while the broader WSJ Dollar Index BUXX, -0.06%[2]  was down 0.1% at 88.21.

The Bank of Japan policy update due early Tuesday Eastern time, followed by the Federal Reserve’s update on Wednesday and the Bank of England early Thursday Eastern time.

While the Fed on Wednesday is expected to something of a nonevent, Japan’s central bank could lower its inflation target to 1.5%, market participants speculated. Inflation targets — with 2% as the “gold standard” — has been a much discussed topic among central bankers and investors who questioned the weight attached to the level.

There’s also speculation that the Bank of Japan could change the yield target for it’s 10-year yield TMBMKJP-10Y, +2.08%[3]

Read: Here’s why investors will be keeping close watch on the Bank of Japan[4]

The Japanese yen USDJPY, +0.04%[5]  was slightly weaker versus the greenback on Monday, with one dollar buying ¥111.06, up from ¥111.04 late Friday in New York.

The Bank of England policy meeting will also be closely watched as “traders will see how the U.K. central bank will try to balance its desire to return to normalization with the looming prospect of no deal Brexit that could wreak economic havoc across multiple industries,” said Boris Schlossberg, managing director of FX strategy.

The central bank led by Gov. Mark Carney is expected to lift rates by 25 basis points to 0.75%.

The British pound GBPUSD, +0.0305%[6]  last fetched $1.3118, up slightly from $1.3104 late Friday.

Also check out: The EU trade pact may be good news for Nafta[7]

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  1. ^ DXY, -0.16% (
  2. ^

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