Stock Groups

Dollar Up as Central Banks Brace Tightening Policies -Breaking


© Reuters.

Zhang Mengying – The dollar was up on Wednesday morning in Asia as central banks globally are expected to brace for tightening policies to tame inflation.

By 12:23 ET (04:24 GMT), the Greenback Index against other currencies had gained 0.2% to 102.60

This pair rose 0.40%, to 133.12. After falling to a 20 year low, the yen lost another 0.4% and climbed to 133.12.

However, Japan’s economy seems to rebound. Data from the government released earlier today showed that Japan’s economy shrank by 0.5% year-on-year in January and March, which is less than the 1.0% decline reported last month.

“Yield differentials continue to favor the U.S. dollar, with USD/JPY breaking above 132,” City Index senior market analyst at brokerage Matt Simpson told Reuters.

“It is quite apparent that the BOJ favors defending yield curve control over a weaker currency,” he said. “135 is the next major line in the sand – the February 2002 high.”

This pair dropped 0.33%, to 0.7204. The pair also fell 0.39%, to 0.64644. It raised interest rates by 0.85% above the 0.60 forecasted by

Pair climbed 0.04% to 6.7373, while the pair fell 0.16% down to 1.2568.

Ten-year yields in the United States remained at or below 3%.

It will be meeting on Thursday to give its policy decision, which widely anticipatedly sets the foundation for further interest rate rises.

Janet Yellen, U.S. Treasury Secretary, stated Tuesday that inflation will remain high and that the Biden administration would likely increase the 4.7% inflation forecast in its budget proposal for 2012.

Global economic prospects remained dim. The for global growth this year to 2.9% from a January prediction of 4.1% due to soaring commodity prices, supply disruptions, and moves by central banks to hike interest rates. Investors are now looking to Friday’s for more clues on the interest rate hike path from the U.S. Federal Reserve.

“With quantitative tightening replacing quantitative easing and 100 basis points of Fed rate hikes coming this summer, you buy bonds and sell the dollar at your peril,” Societe Generale strategist Kit Juckes told Reuters.