Dollar Rises, Investors Focus on Central Bank Decisions

The dollar is getting stronger. Policy decisions by central banks in Australia, Japan, and Europe have made trading volatile.

The dollar index, which tracks the greenback against six other currencies, rose 0.1% to 93.835, with limited movement ahead of next week’s Federal Reserve meeting.

The yen fell 0.2% to 113.56 yen per dollar after the Bank of Japan left interest rates and asset purchase plans unchanged and lowered its forecast for economic growth this fiscal year. It also lowered its inflation forecast for the year to March 2022 to zero from 0.6%.

The Australian dollar fell 0.1% to 0.7504. The Reserve Bank of Australia decided not to buy government bonds to support stimulus projects. Although yields were above the target value of 0.1%, this indicates that the Reserve Bank of Australia will raise interest rates earlier than expected before 2024.

The Canadian dollar rose 0.2% to 1.2374 after the Bank of Canada ended its bond purchases on Wednesday. It hinted that interest rates could be raised immediately in April 2022 as it struggles with rising inflation rates.

Ahead of today’s ECB meeting, the euro remained at 1.1604 euros per dollar. The ECB has announced to maintain its monetary policy and continue printing money. In addition, the ECB stressed that rising prices and higher inflation are to be expected.

The pound fell to 1.3742 after the British prime minister presented an annual budget.

The baht remained stable at 33.285 baht per dollar. Not much has changed since the countdown to the opening of the country in November.

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