Dollar Holds Firm but Pullback Against JPY

Dollar Holds Firm but Pullback Against JPY

The United States (U.S) dollar was little changed against its major trading partners early Thursday, except for some pullback against the Japanese yen, ahead of the release of weekly initial jobless claims and natural gas inventories.

The Federal Reserve is widely expected to raise its federal funds rate by 50 basis points at its next meeting on June 14-15, with possibly a further 50-basis point increase at the July 26-27 meeting as well.

Meanwhile, Federal Reserve officials remain in a quiet period this week ahead of the June meeting, so there are no appearances on the schedule. The consumer price index for May scheduled for Friday is unlikely to have any impact on next week’s FOMC decision.

A quick summary of foreign exchange activity heading into Thursday shows that EUR-USD rose slightly to 1.072 from 1.0717 at the Wednesday US close and 1.0726 at the same point Wednesday morning.

The European Central Bank meeting is Thursday’s highlight. The ECB is not expected to change rates but instead prepare markets for a rate increase at its July 22 meeting and announce changes to its bond purchase program.

French nonfarm payrolls rose at a slower pace in Q1 than in the previous quarter, data released earlier Thursday showed. GBP-USD was roughly unchanged at 1.2536 from 1.2538 at the Wednesday US close and was down modestly from 1.2547 at the same point Wednesday morning.

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There are no UK data scheduled for release on Thursday. The Bank of England meets next on June 16 where another increase in interest rates is expected. READ: U.S. Dollar Declines on Shift in Asset Price Tapering

USD-CAD fell slightly to 1.2556 from 1.2558 at Wednesday US close after moving higher overnight but remained ahead of the 1.2542 level at the same time Wednesday morning.

There are no Canadian data scheduled for release on Thursday, putting the focus on Friday’s May employment report. The Bank of Canada meets next on July 13 after a 50-basis point rate increase last week, with further monetary policy tightening expected.

USD-JPY fell to 133.3507 from 134.2575 at the Wednesday US close and 133.8866 at the same point Wednesday morning. There are no Japanese data on Thursday’s schedule.

The Bank of Japan is expected to maintain its ultra-low interest rate regime at its meeting on June 16-17 immediately following another anticipated 50-basis point rate increase by the Fed. # Dollar Holds Firm but Pullback against JPY

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