Peter Nurse

Investing.com — The U.S. currency edged higher on Thursday thanks to risk aversion from Meta (NASDAQ:), Facebook’s owner. But the primary focus of the meeting will be in London and Europe, where central banks meet. 

The Dollar Index (which tracks the greenback in relation to six currencies) edged 0.2% higher at 96.095, 02:55 ET (075 GMT).

Dollar, considered a secure haven when times are stressful, received support from Meta Platforms after it reported disappointing earnings. It also had a poor outlook. This led to some selloffs in social media and tech stocks.

The Australian and New Zealand Dollars, risk sensitive currencies, were hit hard with a drop of 0.2% to 0.71119 and 0.1% at 0.6622, respectively.

It is currently up 0.5%. However, it has risen nearly 7% since 2015. This performance was its highest since 2015. The Federal Reserve was one of the first central banks to curb its flexible monetary policy in the face of rising inflation.

According to Reuters, strategists believe that the U.S. Dollar will continue to be strong for at least another 3-6 month. However, it will require significant market changes to change expectations regarding Federal Reserve rate increases to propel it higher.

At 7 AM ET (1200 GMT), 7:45 AM ET respectively) the Fed’s policy decisions are due. An ECB president Christine Lagarde news conference is also scheduled for 8:30 AM ET.

1.3555 fell 0.2%, before the Bank of England meeting. The central bank will likely announce its first back-toback interest-rate hike since 2004, following a 15 basis point increase in December. Inflation is at a three decade high.

“Presumably the inflation forecast will be revised a lot higher and the market will be interested in reading whether the BoE still feels CPI will be above the 2% target in 2-3 years’ time – even with all the tightening priced in,” said anal;ysts at ING, in a note.

Inflation is also an issue in the Eurozone after data released on Wednesday showed unexpectedly surged by a record 5.1% in January, more than double the ECB’s 2% target.

The ECB isn’t expected to move at this meeting, but investors will carefully listen to Lagarde’s press conference for any signs of hawkishness, particularly with the Fed and the BOE now talking tough.

Elsewhere the stock index rose 0.1% to 114.99. Japan’s services sector activity contract at the fastest rate in five months. In January the number fell to 47.6 as opposed to the 52.1 reading and the 48.8 flash reading.

In recent weeks Covid-19-related cases have risen in the third largest economy of the world. This has forced the government to impose tougher restrictions across large parts of the country.