Suga is set to succeed Abe. Thus, the yen is looking to politics. On Wednesday, the Federal Reserve policy will make an announcement. Therefore, ahead of the announcement, the United States dollar is under pressure.
There is a wave of M&A deals. It lifted the mood on global equity markets. So, investors looked ahead to an event-packed week. It includes a Federal Reserve meeting and the appointment of a new Japanese premier. Thus, on Monday, the United States dollar retreated against major peers.
The United Kingdom parliament is ready to debate a draft bill. The government admits the bill breaches the terms of the European Union divorce treat. Thus, the attention focused on the pound. Against the dollar, the currency firmed 0.4% after suffering its worst week since March.
The gain was partly down to the United States dollar index, which slipped 0.2%. It happened after firming for two weeks straight.
Dollar and Other Currencies
After Chairman Jerome Powell unveiled a policy shift towards greater inflation tolerance, and It effectively pledged to keep rates low for longer. After that, this week will come first meeting of the United States Federal Reserve.
Lee Hardman is an MUFG strategist. He said that there would be pressure on the Federal Reserve. Pressure will be to back up new policy goals with some action. Moreover, Hardman noted that inflation remained well below the target.
Hardman added that forecasts are that they can strengthen forward guidance, possibly by saying rates will be on hold for three-four years. He remains bearish on the United States dollar.
For the second straight week, speculators trimmed net short dollar positions to $32.67 billion. It is according to Commodity Futures Trading Commission data and Reuters calculation. That is off 9-year highs of $33.68 billion of late August.
Standard Chartered’s analysts said that there was a risk the Federal Reserve would disappoint United States dollar bears.