SINGAPORE- The US dollar was tentative on Monday as investors tried to assess the monetary policy path ahead after a raft of central bank meetings last week, while the yen was fragile in the wake of the Bank of Japan sticking to its ultra-easy policy.
The dollar index which measures the US currency against six major rivals, rose 0.049 percent to 102.33, not far from a one-month low of 102 it touched on Friday. US markets are closed on Monday for a holiday.
In an action-packed week of central bank decisions, the Federal Reserve left interest rates unchanged on Wednesday but hinted that further hikes were on the way to tame inflation.
The European Central Bank raised interest rates by 25 basis points on Thursday and left the door open to more hikes, with the Bank of Japan rounding off the week by standing pat on its ultra-easy policy.
“The Fed’s hawkish hold means that the bar to a hike next month is low,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York.
Investors, though, expect the central bank to be done with its tightening in July.
Markets are pricing in a 72 percent probability of the Fed hiking by 25 basis points next month, CME FedWatch tool showed, and stopping after that.
“The market, which had been pricing in cuts this year until late May still needs to be convinced that the Fed will in fact deliver two more hikes this year,” Chandler said.
Investor focus this week will be on Fed Chair Jerome Powell’s testimony later this week to Congress. – Reuters
