Dollar firms ahead of central bank meetings as steadier stocks stall safe-haven play
TLT•The dollar rose against the euro, yen and pound as investors positioned ahead of Fed, ECB and BOJ meetings, while calmer equity markets reduced demand for safe-haven currencies. The Fed, ECB and BOJ were expected to hold rates steady, while the Reserve Bank of New Zealand and Bank of Canada were expected to raise rates.
1. Central bank outlook
The dollar nudged higher on Tuesday as investors prepared for policy decisions from the Federal Reserve on Wednesday, the European Central Bank on Thursday and the Bank of Japan on Friday. All three were expected to keep rates on hold, leaving markets focused on signals about their outlooks. The Reserve Bank of New Zealand and Bank of Canada were also due to announce decisions Wednesday, with both expected to raise rates.
2. Dollar and currencies
The dollar rose 0.16% to 157.73 yen, while the euro fell 0.26% to $1.1144 and the pound slipped 0.18% to $1.3319. Greater calm in equity markets after recent concerns about AI stocks supported the dollar against safe-haven currencies. ING currency analyst Francesco Pesole said stabilising AI sentiment had allowed markets to reconnect with a broader backdrop of a hawkish Federal Reserve and high energy prices.
3. Regional pressures
The euro remained under pressure from high energy costs, volatility in French government bonds and concerns about France's fiscal position. The euro was down 1.5% against the dollar in October. Japan's service-sector inflation gauge rose 3.7% in September from a year earlier, while Finance Minister Satsuki Katayama said the government was ready to take decisive action in currency markets.
