Dollar Trades Mixed Ahead of FOMC Meeting
The United States (U.S) dollar is mixed against its major trading partners early Friday ahead of a light data schedule that will give markets time to prepare for next week’s Federal Open Market Committee meeting.
The only US data release scheduled for Friday is the Conference Board’s index of leading indicators for December, which is expected to rise by 0.8% after a 1.1% gain in November.
Federal Reserve officials remain in their quiet period until the meeting on Jan. 25-26, where analysts expect the FOMC to signal a possible rate hike in March after the tapering of asset purchases are completed.
A quick summary of foreign exchange action heading into Friday shows that GBP-USD fell to 1.3556 from 1.3598 at the Thursday US close and from 1.3608 a day earlier. UK retail sales fell far more than expected in December, data released earlier Friday showed.
Even so, markets are widely expecting a rate increase at the Bank of England’s meeting on Feb. 3 to hold the line on rising prices and wages. Read: U.S. Dollar Firms After Fed Policy Minutes
Bank of England (BOE) Governor Andrew Bailey said Wednesday that it will take longer for inflation pressure to subside than previously expected and BOE member Catherine Mann speaks later Friday.
EUR-USD improved to 1.1333 from 1.1311 at the Thursday US close and was virtually unchanged from the 1.1340 level at the same point a day ago. European Central Bank President Christine Lagarde speaks Friday morning, followed by EU consumer confidence later Friday.
USD-CAD rose to 1.2529 from 1.2504 at the Thursday US close and from 1.2492 at the same point a day ago. Canada retail sales for November are scheduled to be released Friday morning and are expected to be strong before a possible decline in December due to the omicron variant.
Markets have priced in a rate increase at next week’s Bank of Canada meeting, the start of a series of rate increases in 2022.
USD-JPY fell to 113.7683 from 114.1214 at the Thursday US close and 114.2957 a day earlier. Japanese consumer inflation data released overnight showed overall prices rose less than expected in December and core prices fell at a faster rate than in November.
Earlier in the week, the Bank of Japan had suggested inflation risks were now balanced rather than tilted downward, a modestly positive shift. Parts of Japan, including Tokyo, will be under new COVID-related restrictions starting on Friday that will last through mid-February. # Dollar Trades Mixed Ahead of FOMC Meeting
