Title: Dollar Edges Higher; ECB, BOE Meetings Loom Large

Feb 03, 2022 03:02AM ET

By: AnalysisWatch

The US dollar rose slightly on Thursday, benefiting from some risk aversion after disappointing results from Facebook owner Meta, but the focus is on central bank meetings in the UK and Europe.

At 2:55 AM ET, the dollar index, which tracks the greenback against a basket of six other currencies, rose 0.2 percent to 96.095.

The dollar, considered a safe haven in times of stress, received some support after Meta Platforms reported disappointing earnings and a weak outlook, leading to a sell-off in tech and social media stocks.

Risk-sensitive currencies such as the Australian and New Zealand dollars struggled, with AUD/USD down 0.2% to 0.7119 and NZD/USD down 0.1% to 0.6622.

The dollar index is up just 0.5% so far this year after gaining nearly 7% in 2021, its best performance since 2015 when the Federal Reserve became one of the first major central banks to scale back its accommodative monetary policy in the face of rising inflation.

A Reuter's survey of strategists found that the US dollar is likely to hold sway for at least another 6-9 months, but it will take a significant change in market expectations for Federal Reserve rate hikes to push it higher.

Away from the Fed, monetary policy decisions from the Bank of England and the European Central Bank are due at 7:00 ET and 7:45 ET respectively, and a press conference with ECB President Christine Lagarde is scheduled for 8:00 ET.

GBP/USD fell 0.2% to 1.3550 ahead of the Bank of England meeting, and the central bank is widely expected to make its first two rate hikes since 2004 after a 15 basis point hike in December as inflation hits a three-decade high.