The U.S. Dollar, Yen, and Australian Dollar Weaken Ahead of the Fed Announcement

The dollar weakened in Asian markets Tuesday morning, as did the Japanese yen and Australian dollar. The recent outbreak of the Covid 19 virus in China has forced some cities to close, but the focus remains on the policy decisions of the U.S. Federal Reserve (Fed).

— The U.S. dollar index fell 0.08% against other currencies to 98.948. It was not far from 99.415 last week its highest level since May 2020. Pressure came from the Fed, which is expected to raise interest rates for the first time since the pandemic.

— The yen rose 0.11% to 118.31 with the Bank of Japan (BOJ) set to announce its monetary policy decision on Friday.

— The Australian dollar fell 0.08% to 0.7181 as the situation in China also weighed on the Australian dollar. According to Cong, the Australian dollar continued its downward trend, after falling 1.5% on Monday, as commodity prices weakened after previous gains.

— The New Zealand dollar was down 0.01% to 0.6744.

The yuan rose 0.16% to 6.3754. Chinese data released earlier in the day showed that fixed asset investment rose 12.2% year-on-year in February, industrial production rose 7.5% and retail sales rose 6.7% year-on-year. The unemployment rate was 5.5%. The Chinese yuan weakened to a one-month low against the dollar on Monday as growing expectations of monetary easing and the COVID-19 lockdown hurt the Chinese currency.

— The pound rose 0.20% to 1.3026. The Bank of England will make its monetary policy decisions on Thursday.

— The baht depreciated steadily to 33.49 baht per U.S. dollar.

Market participants hope that Ukraine and Russia will be able to find a diplomatic solution to the current war situation as soon as possible.

Both countries held the fourth round of talks on Monday. However, no new progress was reported and the talks will continue today.

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