A woman arranges Japanese currency at the World Currency Shop in Tokyo, Japan, on December 20, 2006.
Tomohiro Ohsumi | Bloomberg | Getty Biller
The dollar fell lower against major currencies on Monday, with investors awaiting comments from U.S. Federal Reserve President Jerome Powell later in the day and from other central bank politicians this week for monetary policy hints.
Currency markets were hit last month by the financial failure of Russia’s invasion of Ukraine, as economic costs focused more sharply, including higher inflation driven by rising energy costs.
Ukraine has defended a Russian claim that its forces would lay down their arms before sunrise on Monday in Mariupol, where hundreds of thousands of civilians were captured in a city under siege and had already disappeared from Russian bombing raids.
Russia calls the war, the largest attack on a European state since World War II, a “special military operation” to disarm Ukraine. The West describes this as a false pretext for an unprovoked war of aggression.
As the crisis continues, central banks around the world have struggled with how quickly to try to disrupt the rise in inflation.
The Fed raised its key interest rate by 25 basis points last week for the first time since 2018. Traders are now focused on the potential speed and magnitude of future interest rate hikes.
A series of speeches by Fed politicians this week, begun by Powell on Monday, could provide some clues. At least one Fed spokesman is scheduled for each day this week and Powell himself will make another appearance on Wednesday.
The dollar index, which measures the dollar against six peers, fell 0.1% to 98,222.
The Fed’s stance is in stark contrast to the Bank of Japan, which on Friday maintained its huge stimulus program and kept rates steady, arguing that the spike in inflation was temporary.
The BOJ’s devaluation policy has helped weaken the yen, with Japanese currency trading down against the dollar after six years.
The yen continued to rise Monday, 0.1% down to 119,230 yen per dollar, after hitting 119.40 yen on Friday, its lowest level since 2016.
“The widening political divergence pushes the yen further to lower undervalued levels against the US dollar,” Lee Hardman, currency analyst at MUFG, said in a note.
The euro strengthened slightly against the dollar during the day, up 0.1% to $ 1.10585.
Speeches this week by several politicians from the European Central Bank, including President Christine Lagarde, will also be closely watched by traders.
In Europe, too, a meeting of the Norwegian central bank is taking place this week, with interest rate hikes also expected there.
Both the Australian and New Zealand dollars fell that day, down 0.4% and 0.2% respectively, as risk appetite across markets remained in check.
Add Comment