Title: Dollar Up as Central Banks Brace Tightening Policies
Jun 08, 2022 12:31AM ET
The dollar strengthened in Asia Wednesday morning on expectations that central banks around the world would introduce tighter policies to curb inflation.
The U.S. dollar index, which tracks the greenback against a basket of other currencies, was up 0.28% at 102.60 by 12:23 PM ET.
The USD/JPY pair rose 0.40% to 133.12, with the yen extending losses after falling to a 20-year low as the Bank of Japan (BOJ) showed no signs of moving away from ultra-loose monetary policy.
However, the Japanese economy appears to be recovering. Government data released earlier in the day showed that Japan's gross domestic product (GDP) contracted by 0.5% year-on-year in the January-March period, lower than the original 1.0% decline last month.
The AUD/USD pair fell 0.33% to 0.7204, and the NZD/USD pair declined 0.39% to 0.6464. The Reserve Bank of Australia (RBA) announced a surprise rate hike on Tuesday. It raised rates to 0.85%, above Investing.com forecasts of 0.60.
The USD/CNY pair rose 0.04% to 6.6737, while the GBP/USD pair fell 0.16% to 1.2568.
US 10-year yields have remained below 3%.
The European Central Bank (ECB) will meet on Thursday to announce its monetary policy decision, which is widely expected to lay the groundwork for further rate hikes.
U.S. Treasury Secretary Janet Yellen said Tuesday that she expects inflation to remain high, and the Biden administration is likely to raise its 4.7% inflation forecast for this year in its budget proposal.
The global economic outlook remained gloomy. The World Bank lowered its estimate for global growth this year to 2.9% from 4.1% in January, citing rising commodity prices, supply disruptions and central bank interest rate hikes. Investors are now looking to Friday's U.S. Consumer Price Index (CPI) for further clues on the Fed's rate hike path.