Most major currencies were higher against the US Dollar during London trading as investors ponder the possible duration of the US federal government closure. The US Dollar Index was trading at 90.422 .DXY, down 0.17% and not too far from the session trough of 90.389 .DXY; the Index is used to measure the Dollar’s relative strength versus major peers. This week, markets will focus squarely on the US Congress, as well as the European Central Bank and the Bank of Japan, which will be holding policy meetings later in the week.
As reported at 11:19 am (GMT) in London, the EUR/USD was trading at $1.2257, a gain of 0.31%; the pair has ranged from a session trough of $1.22130 to a peak of $1.22740. The GBP/USD was up 0.32% and trading at $1.3899; the pair earlier hit a session high of $1.3916 while the low is at $1.3854. The AUD/USD was up 0.1443% and trading at $0.8016 while the NZD/USD was at $0.7311, a gain of 0.4314%.
Monetary Policy Decisions Ahead
The Bank of Japan meets tomorrow and will announce its monetary policy decision. Analysts are predicting that interest rates will remain at the current level of -0.1%. What will be keenly watched is any signal that the BOJ intends to normalize policy going forward; in other words, when will it begin to curtail its Quantitative Easing scheme? Similarly, the European Central Bank’s statement, due out on Thursday, could also maintain the status quo. Experts are forecasting that the benchmark lending rate will remain unchanged and a continued dovish policy stance is likely. However, the Euro’s recent rise could be a concern so Mario Draghi’s statement at the press conference will be scrutinized for clues.