SYDNEY- The dollar and euro made firm starts on Monday to a week full of central bank meetings, while the yen was struggling on investor expectation the Bank of Japan will be the odd one out as policymakers hike rates in Europe and the United States.
The Federal Reserve concludes a meeting on Wednesday, followed by the European Central Bank (ECB) a day later and the Bank of Japan on Friday.
The yen had dived against the US dollar and crosses last week following a Reuters report that the Bank of Japan was leaning towards keeping its yield curve control policy unchanged, though volatility gauges have spiked as the meeting looms.
The yen was nursing losses at 141.45 to the dollar and at 157.28 to the euro it wasn’t far from last week’s 15-year low at 158.04, nor from last week’s record low on the Swiss franc
The euro held at $1.1121 on Monday. The US dollar index was steady at 101.04.
“The last week left markets believing in a soft-landing scenario for the US markets where the (Fed) ends its hikes … and then sees a steady drop in CPI without a recession,” said Bob Savage, head of markets strategy at BNY Mellon.
“The ECB is also expected to be near the end with the German technical recession easing and growth holding elsewhere. The BOJ is seen talking about change but not doing much.”
Investors expect both the ECB and Fed to raise rates by 25 basis points this week, and the focus in both cases is on the signals they send around their September meetings and anticipation the ECB will stay hawkish while softening inflation gauges might allow the Fed room to hint at a pause.
