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The U.S. dollar firmed up against the Japanese yen as the outcome of the Federal Reserve’s ongoing meeting takes centre stage. The greenback gained against other major currencies as well including the euro and the British pound.

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Dollar pushes higher

The U.S. Dollar traded 0.44% up against the yen at 113.63 while the euro and sterling slipped 0.19% and 0.24% to 1.1086 and 1.4116 against the greenback respectively. Though markets are expecting that the Fed will stay put as far as its policy decision is concerned, there are several analysts who believe that today’s meeting could hint at interest rate hikes in the ensuing weeks.

As per the market consensus, the Fed might announce the first rate hike of the year in June. The Fed had raised interest rates last year in December for the first time in a decade. It is to be noted that higher interest rates fetch a higher yield on the dollar, making it more attractive over other assets.

Disappointed with BOJ’s timing

A day earlier the Bank of Japan had kept its policy rates unchanged but had lowered its expectations about economic growth for the country. The central bank highlighted the weakness in the region’s trade due to weakness in other emerging economies. Most forex traders were unsettled following the decision as they felt that the bank is causing extreme fluctuation between the yen and the dollar due to random policy announcements.

The dollar was also trading higher against the Swiss Franc by 0.12% to 0.9884. Meanwhile, the British Pound was under pressure as uncertainty remains over the outcome of the upcoming referendum that will decide if Britain will exit the European Union or remain a part of it.

The U.S. Dollar Index remained higher against the major currencies as it traded 0.18% up at $96.83 during the late Asian hours.

The U.S. Dollar recovered slightly from yesterday’s losses but was trading cautiously against major currencies today. Concerns over the pace of interest rate hikes by the Federal Reserve continued to weigh on investors ahead of the release of retail sales and consumer sentiment data.

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Dollar back in demand

The dollar pared early losses against the Japanese yen, adding 0.12% to 112.55 yen per dollar. The world’s reserve currency slipped to a 15-month low against the yen to 110.98 on Thursday as investors fled to low-risk safe haven assets. The overall mood across the markets is subdued as market participants reel under the fear of another approaching global recession.

Also, the sharp bearish momentum in oil continues to eat away at sentiment. Crude oil prices largely traded around $28 per barrel today even as the United Arab Emirates expressed OPEC’s desire to cooperate for an oil output cut.

Some Concerns Remain

The dollar appeared to be gradually strengthening against major currencies after the market seemed to have moved over the Federal Reserve’s statements yesterday. In her testimony before Congress, Fed Chair Janet Yellen maintained guarded optimism over the direction of the U.S. economy while adding that rate hikes could take place at a slower pace than earlier projected. Following that, the dollar bore the brunt as the market interpreted the remarks negatively, in the sense that the economy was not strong enough for rate hikes.

However, the greenback recovered today as it gained some ground against the euro. EUR/USD was down by 0.46% to 1.1269. According to reports, German gross domestic product recorded 0.3% growth in the fourth quarter, which met expectations. On a yearly basis, Germany’s GDP went up by 2.1% in the last quarter, which came below the forecast of 2.3% growth rate.

Meanwhile, USD/CHF was up by 0.45% to 0.9767, reflecting some decreased interest towards Swiss Franc, which is considered a safe haven asset. The British pound moved up by 0.22% to 1.4507 against the dollar today.

Análisis semanal forex 3 al 7 de agosto por Álvaro Liguori

Álvaro Liguori, de Forex Trading Invest, nos ofrece nuevamente su análisis semanal forex correspondiente a la semana del 3 al 7 de agosto.

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