Alden Bentley and Amanda Cooper
NEW YORK/LONDON (Reuters) – The dollar rose against the euro and the yen in subdued trading after last week’s volatility, with markets taking the lead on Federal Reserve remarks that growth would be stronger in the longer term and a more resilient Wall Street ahead of mega-cap growth results. companies.
The dollar/yen pair remained steady on Monday, rising 0.08% ahead of the Bank of Japan’s (BOJ) policy review on Friday, trading at 154.75, within a hair’s breadth of last week’s 34-year low of 154.79 and quite close to the 155 level, which is next on traders’ radars due to possible intervention.
“The BOJ meeting will be a big focus, but it’s too early for them to change policy and the market is leaving little room for rate changes,” said Chris Weston, head of research at Pepperstone.
The trade-weighted dollar index rose 0.22% to 106.33, but below a five-month high hit last week after comments from Federal Reserve officials and a series of hotter-than-expected inflation data prompted the U.S. to lower rate cut expectations .
Easing tensions in the Middle East, which sent the dollar, gold and oil soaring on Friday and hit stock markets, also helped reduce volatility. Tehran downplayed the retaliatory Israeli drone strike, which appeared to be a move aimed at preventing a regional escalation.
“The fact that stocks are up a little bit today as tensions have eased a little bit is what we’re focused on,” said John Doyle, vice president of trading and dealing for Monex USA in Washington. “We’re expecting a pretty easy day as we put this in the rearview mirror and look at earnings season.”
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Deutsche Bank’s currency volatility index rose 9.7% last week to its highest level since February.
In addition to the Bank of Japan meeting and earnings from major companies such as Tesla (NASDAQ:) on Tuesday, Meta (NASDAQ:) on Wednesday and Microsoft (NASDAQ:) and Alphabet (NASDAQ:) on Thursday, investors will receive data on the US gross domestic market for the first quarter. Thursday grocery data and inflation gauge, Fed target, personal consumption expenditure (PCE) index.
“Forex has been in the spotlight for the past few weeks and could take a backseat this week as earnings take center stage,” said XTB research director Kathleen Brooks.
A strong dollar also dominated the spring meetings of the International Monetary Fund and the World Bank last week in Washington, with the United States, Japan and South Korea making a rare joint statement on the issue.
Speaking after a meeting of Group of 20 (G20) financial leaders in Washington, Bank of Japan Governor Kazuo Ueda said the Japanese central bank could raise interest rates again if a weaker yen significantly boosts inflation, highlighting the dilemma the weak currency has posed for policymakers.
The Fed’s easing rethink has led to a general rethink of the timing of global rate cuts, but expectations still remain that the European Central Bank (ECB) and Bank of England (BoE) will begin cutting rates by mid-year.
The euro, on course for its biggest monthly fall against the dollar since January, fell 0.27% to $1.0628 and sterling fell 0.54% to $1.2302.
Analysts don’t see too much potential for U.S. Treasury yields to rise further, given the weak economic data calendar for the rest of the month and how far they’ve already risen as investors reassess Fed expectations.
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was last up 2% at $65,947. The world’s largest cryptocurrency completed its “halving” over the weekend, a phenomenon that occurs roughly every four years and is aimed at slowing down the rate at which Bitcoin is created.