The week started off poorly for the dollar, which saw its value decline against a group of significant rivals to a seven-month low in Asian trade before stabilizing. Because traders were betting that the Bank of Japan would continue to alter its yield control policy, the yen was given special attention.
The euro reached a new nine-month high of $1.08724 in early trade before falling to close 0.16% lower at $1.0816. The Australian dollar passed through the crucial $0.7000 level for the first time since August before retracing to $0.6962.
The dollar index dropped to a seven-month low of 101.772 due to the British pound and the Japanese yen’s early strength.
When the Fed announces its policy decision in February, the markets are currently pricing in a 91% chance of a 25-bp increase and a 9% chance of a 50-bp hike.
The dollar gained ground against the pound in European trading, declining 0.3 percent to $1.2195.
After a choppy session in New York on Tuesday due to conflicting results from Wall Street banks, contracts on the S&P 500 and Nasdaq 100 indexes were each 0.2% higher. Despite increases against the yen, a measure of the dollar’s strength declined. Following the BOJ’s unanimous decision to keep its yield curve control program in place, Treasuries rose. West Texas Intermediate oil futures are on track for their longest winning streak in four years as investors bet on rising Chinese demand.
Dollar vs. Yen
This week, the Japanese yen has been a particular focus for currency markets because of speculation that the Bank of Japan will make additional changes too, or completely abandon, its yield control policy at a meeting scheduled to end Wednesday.
The dollar hit a more than seven-month low early in trading before rising and closing at 128.44 yen, up 0.04 percent.