adminThe dollar broadly rose yesterday ahead of a key US central bank policy meeting, while China’s yuan hit fresh multi-year lows as policymakers signalled a move away from its peg against the greenback.
Markets are focused on the Federal Reserve, which is expected to give the go-ahead to a small increase in borrowing costs for the first time in nearly a decade – a plus for the dollar.
The Fed’s two-day meeting, which starts today, comes as plunging oil prices and worries about the global economy have recently sent investors flocking to safe-haven units including the yen and euro.
“While the US dollar has been trending higher over the past year in anticipation of the first likely rate hike in a decade, the tone of the (Fed) statement will determine how the US dollar might fare” going forward, Bank of New Zealand currency strategist Jason Wong said in a commentary.
“Fed tightening will be occurring at a time when other major central banks are on hold or still easing, which should continue to provide support to the US dollar,” he added.
Higher interest rates attract investors seeking better returns to dollar-denominated assets.
Yesterday, the greenback rose to ¥121.10 from ¥120.86 on Friday in New York, but it was still well down from ¥123 at the start of last week.
Also yesterday, a closely watched Bank of Japan survey on business confidence showed major manufacturers were cautious last quarter.
However, the slightly better-than-expected result dampened hopes that the Bank of Japan would expand its huge stimulus programme this year, further supporting the yen.
The euro weakened to $1.0958 and ¥132.70 from $1.0996 and ¥132.89 in US trade.— AFP.
Online Reporter