Forex markets made a quiet opening but turned negative for the euro and the US dollar as key economic developments across the globe are being closely followed by market participants. The policy decision by the Bank of Japan and U.S. Federal Open Market Committee later today will dictate market trends going forward.
Monetary Policy Meetings Across The World
During the later Asian trade, the euro had sunk 0.25% to 1.119 against the U.S. dollar while the Japanese yen had gained 0.11% to 113.70 against the dollar. Apart from policy decisions by the Bank of Japan and the Federal Reserve, there are several other central banks scheduled to meet on monetary policy as well.
The Swiss National Bank and the Australian and Norwegian central banks are all set to meet this week, which will give an indication of the ability of these banks to deliver on market expectations, according to analysts.
Immediate Rate Hike Not Expected
The results of the German election over the weekend led weakness in the euro today. The currency had paradoxically soared higher after the European Central Bank had announced deep interest rate cuts. Meanwhile, the greenback lost strength against the Yen as there are wider expectations that the Bank of Japan will keep interest rates unchanged after the surprise rate cut in January.
At the same time, expectations are highthat the Federal Reserve keep interest rates unchanged at the Federal Open Market Committee today. Currency strategist at Citigroup, Josh O’Byme, believes that dovish commentary by the Fed could hurt the dollar to some extent.
The tone of the Bank of Japan will be very crucial today as the ECB had indicated last week that there is no room for further rate cuts last week. It should be noted that the ECB had adopted negative interest rates on deposits before the Bank of Japan did.