The U.S. dollar retreated from a seven-month low on Tuesday. Meanwhile, the Japanese yen fell ahead of the Bank of Japan meeting.
The Dollar Index increased 0.1% to 102.005 on Tuesday after falling to a seven-month low of 101.77 on Monday.
Early on Tuesday, the dollar found some support, but the market now agrees that it has peaked as the U.S. Fed approaches the end of its rate-hike cycle as inflation declines.
The United States data calendar is light this week, but existing home sales, industrial production, and retail sales are all predicted to decline.
Although the yen has given back some gains in the session, the USD/JPY pair is slightly higher than a seven-month low, indicating a change in sentiment. The pair is currently trading at 128.56.
Traders will closely watch The Bank of Japan’s policy-setting meeting later this week as speculation grows that officials will announce a modification to or termination of Japan’s yield curve control policy.
Other Currency News
The EUR/USD rose 0.12% to 1.0832, just off the previous session’s nine-month high of 1.0874. Meanwhile, the GBP/USD rose 0.22% to 1.2217 after the U.K. labor market remained stronger than expected in December.
In the U.K., more people are claiming benefits than expected—19,700 more people than expected, according to economists. In addition, November’s figures were downgraded from the initial report of 30,5020, only to show an increase of 16,100.
The most recent month for which data are available, November, saw wage growth stronger than anticipated, rising 6.4% year over year. This suggests that the Bank of England will need to continue tightening to keep inflation under control.
USD/CNY rose 0.522% to 6.7660, with the yuan retreating from a five-month-high after data revealed that the Chinese economy grew at a much slower pace in 2022 than the previous year, rising 3.022%, far below the official target of around 5.51%.
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