Dollar Up as Central Bank Prepare to Hand Down Policy Decisions

By Gina Lee – The dollar was up on Monday morning in Asia. The Japanese yen hit a fresh five-year low as a slew of central banks prepare to hand down their policy decisions throughout the week.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.06% to 99.245 by 11:21 PM ET (3:21 AM GMT). The dollar index contract rolled over to the June 22 contract on Mar. 13.

The USD/JPY pair gained 0.48% to 117.84.

The AUD/USD pair was down 0.45% to 0.7258 and the NZD/USD pair was down 0.33% to 0.6784.

The USD/CNY pair edged up 0.16% to 6.3498 while the GBP/USD pair edged down 0.16% to 1.3014.

Hopes that talks between Russia and Ukraine to end the conflict that began with the former’s Feb. 24 invasion weighed on safe-haven currencies such as the yen and Swiss franc.

U.S. Deputy Secretary of State Wendy Sherman said on Sunday that there could be signs that Russia is willing to begin substantial negotiations to end its invasion of Ukraine. However, fighting in the conflict that began on Feb. 24 continues.

The dollar climbed to as much as 117.61 yen earlier in the session, the highest level since January 2017, extending gains from the previous week which Barclays PLC analysts attributed to a decline in demand for safe havens as equities rallied.

“The BOJ’s dovish bias, in contrast to the expected Fed liftoff, should continue to support dollar-yen alongside negative terms of trade impact from high energy costs,” Barclays PLC added, adding there is “no clear resistance until the end-2016 high of 118.6.”

The Bank of Japan is widely expected to maintain a dovish stance when it hands down its policy decision on Friday. The Fed, on the other hand, is expected to hike interest rates when it hands down its decision on Wednesday. The Reserve Bank of Australia will also release the minutes from its last meeting on Tuesday.

The Bank of England (BOE) will also hand down its policy decision, with bets firmly on a further 25-basis-point rate hike.

“How the Fed and ECB’s rate hikes will affect the pound “will depend in large part on their post-meeting statements and the Fed’s press conference. With the U.K. more exposed to the Russian supply shock than the U.S., we think the risks lies with disappointment by the BOE and a weaker pound down to 1.2894,” CBA analysts said in a note.

The euro traded at $1.0935, with hopes of an end to the conflict in Ukraine giving it a small boost. However, the conflict’s impact on eurozone growth continues to weigh on the single currency. Commodity-linked currencies, such as the Australian and the New Zealand dollars, retreated from the multi-year highs hit in March due to surging oil, grain, and metals prices.

In cryptocurrencies, bitcoin was near the $37,800 mark after a quiet weekend for the digital asset.

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