Dollar up, yen steady as BOJ policy shift looms
By Herbert Lash and Harry Robertson
NEW YORK/LONDON (Reuters) — The dollar edged higher on Monday ahead of a slew of central bank meetings this week, with the Bank of Japan potentially set to end negative interest rates and the market waiting for the Federal Reserve's latest projections for its rate cut plans.
In addition to Japan and the United States, central banks in Britain, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil and Indonesia are all due to meet this week.
The dollar index, which measures the U.S. currency against six other major currencies, rose 0.145% at 103.600. It has strengthened just over 2% this year as the U.S. economy has fared better than expected, leading investors to rein in bets that the Fed will cut rates quickly and deeply this year.
Markets are now pricing in less than three cuts of 25 basis points each in 2024, down from almost double that at the year's start, LSEG data shows. Futures show about a 51% chance of the first rate cut coming by June, also down sharply from earlier expectations, according to CME Group's (NASDAQ:CME) FedWatch Tool.
The focus on Wednesday will be on whether Fed policymakers change their projections, or dot plots, for the economy and rate cuts for this year and the next two. The Fed in December projected 75 basis points of easing in 2024.
«I think they're going to stay with three cuts, but if they change, it's more likely to be to two cuts, rather than four,» said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. «One thing that could surprise people would be that the median dot goes up for unemployment.»
The Japanese yen traded little changed, up 0.02% at 149.11 per dollar.
The yen has had a whirlwind few weeks, weakening to
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