The US Dollar Index was trading close to a 10-month trough as investors await major policy decisions from several of the globe’s key central banks. Ahead are monetary policy announcements from Europe and Japan, with FX traders wary of the recent appreciation in their respective currencies, the Euro and Japanese Yen. Some analysts believe that that means a decidedly dovish posture is likely from either or both central banks which could help push through the Dollar’s rebound. The greenback continues to feel the weight of Donald Trump’s failed healthcare plan which is once again stalled in the US Congress.
As reported at 11:09 am (BST) in London, the EUR/USD was trading at $1.1533, down 0.18% and well off the session peak of $1.15573. The USD/JPY was down 0.06% to trade at 111.966 Yen; the pair has ranged from a low of 111.876 Yen to a peak of 112.240 Yen in this trading session. The GBP/USD was down 0.09% to trade at $1.3031.
ECB and BOJ Projections
Tomorrow, the European Central Bank will make its announcement and many believe that Mario Draghi could begin to hint at its winding down toward normalcy of the long held Quantitative Easing program. The ECB has several options to begin reining in QE but analysts say that it will likely want to retain some flexibility and thus may leave QE purchases on an open-ended basis rather than suggesting a specific stop date for bond purchases. Analysts expect the Bank of Japan to lower its inflation outlook while raising growth forecasts, suggesting that it will continue to lag the other major banks in terms of easing off of the QE pedal.