Dollar Sees Weekly Gain prior to Central Bank Meetings next week
Bullish Trend
The dollar was poised for a weekly gain against major currencies, while the yen edged lower on Friday, setting the stage for a busy week ahead with highly anticipated central bank meetings, including those of the U.S. Federal Reserve and Bank of Japan.
Japan's Wage Agreement
In Japan, significant wage agreements between major companies and labor unions buoyed expectations of a shift away from negative interest rates by the country's central bank. This development signaled the potential for a landmark shift in monetary policy, further influencing market sentiment.
Central Bank Meetings
Investors closely monitored central bank decisions for signals regarding future interest rate adjustments, particularly in response to recent inflationary pressures. Besides the Fed and Bank of Japan meetings, attention was on the Bank of England and Swiss National Bank gatherings scheduled for the following week.
Dollar Performance
The dollar index, tracking the greenback against a basket of major peers, posted a modest decline on the day but was on track to end the week with a 0.6% gain, breaking a three-week losing streak. Traders tempered expectations of future rate cuts following hotter-than-expected U.S. inflation data earlier in the week.
Yen Movement
The yen weakened against the dollar, heading for a weekly decline of 1.1%, its most significant since January. Anticipation grew that the Bank of Japan might soon abandon its long-standing negative interest rate policy, especially following strong wage outcomes.
Euro and Sterling
Meanwhile, the euro edged higher against the dollar, while sterling remained largely flat. Recent discussions within the European Central Bank on potential rate adjustments added to market speculation about monetary policy shifts in the eurozone.
Bitcoin Volatility
Bitcoin prices experienced volatility, sliding up to 7% from record highs reached earlier in the week. Risk sentiment fluctuations contributed to the cryptocurrency's retreat, with prices down nearly 4% at $67,955 at the time of reporting.
