The Forex-Dollar Is Stable As Investors Anticipate Economic Data
US Dollar Index Forecast, News and Analysis
The index surged 8% last year, its greatest annual gain since 2015, as the Fed raised interest rates to combat inflation. The dollar is expected to stabilize as "market activity progressively ramps up this week," according to Christopher Wong, the currency analyst at Singapore's OCBC Bank.
The US dollar remained fairly unchanged on Tuesday as investors awaited a barrage of economic data this week, as well as minutes from the previous Federal Reserve meeting, which will give insight into the Central Bank's thinking on interest rates and inflation.
The dollar index, which measures the US currency against six key currencies, has had a slow start to 2023, rising 0.068% to 103.710. The index surged 8% last year, its greatest annual gain since 2015, as the Fed raised interest rates to combat inflation.
The dollar is expected to stabilize as "market activity progressively ramps up this week," according to Christopher Wong, the currency analyst at Singapore's OCBC Bank. After four straight 75-basis-point rises, the Federal Reserve boosted interest rates by 50 basis points last month. The minutes of the December meeting is expected to be issued on Wednesday, with investors hoping for clues about the Fed's likely policy course in 2023.
Citi analysts predicted that the minutes would grow more fascinating as the doves and hawks differed on how high the final rate should be. "We will also be watching for any advice on what might decide the amount of the rise at the February meeting," Citi said, adding that they continue to predict a 50 basis point boost in February.
Investors will also be watching the payrolls data, which is coming out on Friday. In other news, the Japanese yen rose 0.46% against the US dollar to 130.12 per dollar, its highest level since June.
On Saturday, the Nikkei reported that the Bank of Japan (BOJ) was considering boosting its inflation estimates in January to show price increases near the 2% objective in fiscal 2023 and 2024. Upgrades to the BOJ's inflation prediction would likely feed more speculation that the central bank is seeking to adjust its ultra-loose monetary easing policy, and would follow the BOJ shocking markets by broadening its 10-year yield limit range.
Meanwhile, the euro was down 0.07% to $1.0655, while the sterling was down 0.07% to $1.2037.