The US Dollar Index edged away from its recently struck 2½ month peak; however losses were tempered by rising risk appetite. Across the world, equity markets were pushed higher after the People’s Bank of China cut interest rates again in an attempt to stimulate a stagnating economy. Analysts foresee further upsides for the US Dollar and the Japanese Yen, especially against their crosses. The Euro will continue to be under significant pressure as markets wait for the ECB to initiate the next round of easing as was promised by Mario Draghi last week.
As reported at 9:56 am (GMT) in London, the US Dollar Index was trading at 96.902 .DXY, a loss of 0.23%. On Friday, the Index struck 97.201 .DXY, a level last seen in mid August. The Index is used by traders to gauge the relative strength of the greenback versus its major rivals. The USD/JPY was trading at 121.0985 Yen, down 0.20% while the EUR/USD was trading higher at $1.1026, a gain of 0.07%.
Monetary Policy Decisions to Drive Sentiment
Markets’ focus will be drawn to the central banks this week, chief among them the US Federal Reserve Bank which will announce its policy decision on Wednesday. Markets are still waiting to get some indication as to whether the Fed will honor its pledge to increase rates this year. The Bank of Japan and Reserve Bank of New Zealand are also going to announce any monetary policy changes this week, on Wednesday and Friday, respectively.