The U.S. dollar steadied on Thursday after a recent decline against several major currencies, as investors remained cautious ahead of a series of central bank meetings next week, led by the Federal Reserve, which markets expect to leave interest rates unchanged.
Traders continue to support the dollar on expectations that the boom in artificial intelligence will help sustain the strength of the U.S. economy, supporting the case for keeping interest rates elevated for longer.
However, recent gains by the British pound, Canadian dollar, Australian dollar and New Zealand dollar, which pushed the currencies to multi-week highs against the U.S. dollar, point to a relative easing of bullish bets on the greenback, despite limited movements in Thursday’s trading.
The British pound was steady at $1.33955 after reaching a one-month high of $1.3409 earlier in the week, supported by stronger-than-expected UK inflation data.
The Australian dollar held above 70 U.S. cents at $0.7025, after reaching a three-week high on Wednesday.
In New Zealand, expectations of an interest rate hike next week pushed the New Zealand dollar to a one-month high of $0.5709.
Expectations of a Bank of Canada rate hike next week also kept the Canadian dollar near a one-month high, with the U.S. dollar trading at 1.4032 Canadian dollars.
In Asian and European markets, the euro and Japanese yen traded within narrow ranges as investors awaited monetary policy decisions.
The yen remained near 158 per dollar, supported by the possibility of intervention by Japanese authorities in the foreign exchange market and expectations over a potential interest rate hike.
The euro continued its decline from the previous month amid concerns over France’s fiscal situation and vulnerabilities in Europe’s energy sector, strengthening investor bets on further weakness against the dollar.
Attention next week will turn to the European Central Bank meeting, with the main interest rate expected to remain at 2.5%, while markets expect a rate increase before the end of the year.
In Japan, markets largely expect interest rates to remain unchanged at the upcoming meeting, with the Bank of Japan expected to deliver its next increase early next year, taking the rate to 1.5%.
In the United States, the Federal Reserve is expected to leave interest rates unchanged at its October meeting, with markets anticipating a rate hike in December.
Source:Reuters
