Sharjah24 – Reuters: The dollar slipped on Monday as traders stayed on guard ahead of policy decisions this week from several central banks, including the Federal Reserve, who are expected to keep interest rates on hold for the first time since January 2022.
Monetary policy meetings of the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set the tone for the week as markets seek clues from policymakers on the future path of interest rates.
U.S. May inflation data is also out on Tuesday as the Fed kicks off its two-day meeting.
"FX markets should be subdued today because of the important meetings from the Fed and ECB on Wednesday and Thursday," said Niels Christensen, chief analyst at Nordea.
Money markets are leaning towards a pause from the Fed when it announces its interest rate decision on Wednesday, according to the CME FedWatch tool, expectations that sent world stocks surging to a 13-month high on Friday as risk sentiment improved.
Conversely, a clear majority of economists polled by Reuters expect the ECB to hike its key interest rate by 25 basis points this week and again in July, before pausing for the rest of the year as inflation remains sticky.
"We are pretty much with consensus, expecting the Fed to stay put this week and a 25 basis point hike from the ECB," Nordea's Christensen said.
"When we get through the summer, however, the market would be very focused on when the Fed will start cutting rates and that could leave the dollar a little bit vulnerable going forward," Christensen added.
For an optimal experience, please
