Dollar Weakens Ahead of Central Bank Week
The US dollar weakened early in the week ahead of the central bank "super week." On Monday (September 15th), the dollar index (DXY) was at 97.147 during the European session, the dollar index (DXY) was at 97.147. Asian trading was relatively quiet due to Japanese markets being closed, while the euro remained flat at $1.1729 despite Fitch's downgrade of France's debt rating, which removed its AA- status and weighed on regional sentiment.
Market focus is on the Fed's decision on Wednesday. Expectations for a 25-bps cut are already high, so the dollar's direction will be heavily influenced by the "dot plot" and the tone of Jerome Powell's press conference. To truly move the market, Powell will need to sound more dovish than currently; if the Fed cuts by 50 bps, the dollar could fall further—unless Powell signals limited room for further cuts.
Elsewhere in the G10, sterling rose to $1.3565 and the AUD strengthened to $0.6663, approaching a 10-month peak. The New Zealand Dollar (NZD) was at $0.5964. The yen strengthened slightly to ¥147.44 per dollar ahead of the BoJ meeting; Governor Ueda's comments on the next policy direction will be beneficial. MUFG believes political analysts in Japan following the resignation of Prime Minister Ishiba remain bullish on the yen unless the BoJ signals a rate hike as early as next month.
In Asia, the onshore yuan was at 7.1213 per dollar despite China's August data—factory production and retail sales—weakening to its lowest pace since last year. In addition to the Fed and the BoJ, the market is also awaiting decisions from the Bank of England, Bank of Canada, and Norges Bank, as well as US-China talks. (ayu)
Source: Newsmaker.id
