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 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.
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%.