Dollar heads for monthly losses, yen steady ahead of BoJ decision

I don’t expect the BoJ to change its monetary policy this time around, but the recently released Tokyo CPI is higher than expected….

SINGAPORE ( – The US dollar was on course for a second straight monthly loss early Friday, amid growing expectations that the Federal Reserve may end its aggressive rate hike cycle soon, while the yen steadied near a one-week high ahead of a bank decision. important centre.

The Bank of Japan’s (BoJ) monetary policy decision on Friday took center stage in Asia, where it is expected that new BoJ Governor Kazuo Ueda will maintain very loose monetary policy at his debut policy meeting.

The focus will also suit Ueda’s tone, with investors keenly watching for any changes in forward guidance.

Also read: The US dollar strengthened slightly on the prospect of an increase in the Fed’s interest rate

Ahead of the decision, the Japanese yen traded 0.1 percent higher at 133.84 per US dollar, and was also up more than 0.1 per cent against the British pound.

“I don’t expect the BoJ to change monetary policy this time around, but the recently released Tokyo CPI was higher than expected… I think this is putting pressure on the BoJ, they might do something in the near term,” said Tina Teng, market analyst at CMC Markets.

Core consumer prices in the Japanese capital, Tokyo, rose 3.5 percent in April from a year earlier, government data showed on Friday, beating market estimates in a sign of widening inflationary pressures in the world’s third-largest economy.

In broader currency markets, the US dollar slumped against most of its peers but losses were limited by data showing inflation was still strong in the world’s largest economy, reinforcing expectations for a 25 basis point interest rate hike at next week’s FOMC meeting.

Also read: The yuan rose 30 basis points to 6.9207 against the US dollar

Against a basket of currencies, the US dollar index last stood at 101.45 and is headed for a monthly loss of more than 1.0 percent, after falling around 2.3 percent in March.

Sterling slipped 0.06 percent to $1.2492.

Data released on Thursday (27/4/2023) showed that while US economic growth slowed more than expected in the first quarter, consumer spending, accompanied by rising inflation, accelerated.

The measure of inflation in the economy, the price index for gross domestic purchases, rose at a pace of 3.8 percent after rising at a rate of 3.6 percent in the fourth quarter, while the PCE core price index jumped at a rate of 4.9 percent after rising at a pace of 4. 4 percent in the previous quarter.

“The Fed is widely expected to raise rates again next week but with inflation remaining strong, we expect the Fed to stay on hold for the rest of the year, dashing hopes of a policy change in (the second half),” said analysts at Societe Generale.

Also read: Euro nears 1-year peak in Asia, as risks to the US economy weigh on the dollar

Elsewhere, the euro held near a recent one-year high and last bought $1.1033, eyeing a monthly gain of near 2.0 percent.

The common currency has been supported by expectations that the European Central Bank still has more to do in raising interest rates, contrary to expectations dovish from its US counterpart.

“Investors favor a currency that can offer off the ongoing domestic tightening cycle and there is still room for surprises hawkish at future meetings,” said the ING analyst. “In that sense, the euro is one of the few currencies that can offer that combination at the moment.”

Meanwhile, the Australian dollar rose 0.05 percent to $0.66335, while the kiwi gained 0.07 percent to $0.61515.

Translator: Apep Suhendar
Editor: Nusarina Yuliastuti


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