The U.S. dollar stood at 106.13 yen on Monday, stuck in its familiar territory in the past couple of weeks. Japanese Chief Cabinet Secretary Yoshihide Suga will become head of Japan’s ruling party on Monday and prime minister on Wednesday, succeeding Shinzo Abe, who left the post a few weeks ago.
Suga has been a loyal aide to Abe for a long time, and he vowed to continue Abe’s policies. So, market players don’t expect radical changes. Minori Uchida, the chief FX strategist at MUFG Bank, stated that the focus is on the line-up of Suga’s cabinet as well as whether he will call a snap election. Suga claims that he will continue and advance Abenomics. However, it is questionable how much advancement he can make.
Meanwhile, the Sterling remained near a 1-1/2-month low against the dollar on Monday due to fears about no-deal Brexit. The British pound traded at $1.2806 after plunging to $1.2767 on Friday. Against the euro, the Sterling dropped to 5 1/2-month low of 92.54 pence per euro. It last stood at 92.47.
The currency was under pressure from concerns that Britain will end its post-Brexit transition period without agreeing to any trading arrangements.
Last week London acknowledged that it could break international law by ignoring some parts of its European Union divorce treaty. The EU’s chief executive rebuked such intentions, though.
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How did the Euro fare?
The euro strengthened after three straight days of gains at $1.18455. The common currency got support after the ECB showed no apparent sign of stemming its appreciation.
Meanwhile, the dollar’s index against a basket of currencies changed slightly at 93.317. Traders were mostly focused on the Federal Reserve’s policy announcement on Wednesday.
Thus far, the dollar index has lost more than 4% this quarter. Traders’ expectations of further monetary easing by the Fed have been a drag on the greenback. But some experts say markets may have gone too far in waiting for further stimulus from the Fed.