Title: Dollar Up, Claws Back from One-week Low

Jun 17, 2022 12:55AM ET

By: AnalysisWatch

The dollar gained in Asia Friday morning, recovering from a one-week low after falling for two days on the Federal Reserve's decision to raise interest rates.

The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, was up 0.57% at 104.014 by 12:49 AM ET.

The USD/JPY pair was up 1.30% at 133.93, with the yen falling sharply after the Bank of Japan (BOJ) announced earlier in the day that it would keep monetary policy extremely loose despite rising inflation, while central banks around the world are pursuing tight monetary policies.

Given the low probability that the Bank of Japan would take action today, if you were invested in dollars and yen, you would have taken risk off the table because of the risk and the chance that the decision could be wrong, Ray Attrill, strategist at National Australia Bank, told Reuters.

"Now that that risk is gone and the BOJ has been inactive, it's only logical that we go back to where we started," he added, expressing no conviction that the dollar has peaked.

The AUD/USD pair fell 0.41% to 0.7016, and the NZD/USD pair fell 0.33% to 0.6341.

The USD/CNY pair fell 0.02% to 6.7014, while the GBP/USD pair fell 0.38% to 1.2304.

Global central banks are tightening monetary policy to curb rising inflation.

The U.S. Federal Reserve on Wednesday announced its biggest rate hike since 1994. The Swiss National Bank also unexpectedly raised rates by 50 basis points on Thursday, while the Bank of England raised its rates to 1.25% on the same day.

On the data front, initial jobless claims in the U.S. fell to 229,000 in the week ended June 11, down slightly from 232,000 the previous week