The dollar started the last trading week of the month on a firmer footing as traders awaited a spate of central bank policy meetings that could indicate how soon the sharp global interest rate increases might cease.
Next week’s FOMC meeting is projected to raise rates by 25 basis points, but the focus will be on future rate guidance.
Despite recent economic statistics showing weakening U.S. growth, sections of the economy continue to show resiliency. At the same time, inflation remains sticky, leaving traders discussing the size of rate cuts planned from July until the end of the year.
In Asia trade, the euro fell 0.07% to $1.0981 and the sterling 0.06% to $1.2437.
Aussie lost 0.29% to $0.6674.
After losing roughly 2% in March, the U.S. dollar index rebounded 0.13% to 101.81.
On Friday, U.S. and euro zone business activity increased in April, easing concerns about a global recession.
“The takeaway from the various PMIs is that the services sector both in Europe and the U.S. seems to be pretty resilient,” said National Australia Bank head of FX strategy Ray Attrill.
“There’s nothing, as yet, to hang your hat on rate cuts in the second half of the year,” he said, adding that inflation-related data would need to indicate price pressures lessening.
Next week, the European Central Bank (ECB) is expected to raise rates by a quarter point, maybe 50bp.
Last week, ECB President Christine Lagarde said euro zone inflation is too high and the ECB’s monetary policy “still has a bit of way to go” to reach its 2% goal.
The kiwi declined 0.15% to $0.6130/
This week, new Bank of Japan Governor Kazuo Ueda’s maiden policy meeting takes center stage in Asia.
Since succeeding Haruhiko Kuroda early this month, Ueda has reassured markets that any policy shift won’t happen swiftly.
“We still look for a removal of the YCC (yield curve control) regime, an interest rate hike at some stage this year amid broadening inflationary pressures and upward pressure on wage growth in Japan,” said OCBC currency strategist Christopher Wong.
The yen fell 0.2% to 134.41 per U.S. dollar.
