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Dollar Dips Amid Ukraine War

by Carl Steward
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dollarDollar Dips Amid Ukraine War

The dollar edged lower against major currencies on Monday, with investors looking for monetary policy cues from US Federal Reserve chair Jerome Powell later in the day and other central bank policymakers this week. Currency markets have been roiled in recent months by the financial fallout from Russia’s invasion of Ukraine. The economic costs, including higher inflation fuelled by rising energy costs, have come into sharper focus.

As the crisis worsens, central banks worldwide have been debating how quickly to try to contain soaring inflation.

For the first time since 2018, the Fed raised its key interest rate by 25 basis points last week. Traders are now focusing on the timing and magnitude of future rate hikes.

This week, a series of speeches by Fed policymakers, beginning with Powell on Monday, may provide some hints. Every day this week, at least one Fed speaker should speak, and Powell himself will speak again on Wednesday.

The dollar index, which compares the greenback to six other currencies, fell 0.1 percent to 98.222. The Fed’s stance contrasts sharply with that of the Bank of Japan, which maintained its massive stimulus program and held rates steady on Friday, arguing that the spike in inflation was only temporary.

The Bank of Japan’s dovish policy has aided the yen’s depreciation. The Japanese currency traded near six-year lows against the dollar.

The yen fell 0.1 percent to 119.230 yen per dollar on Monday, after failing to 119.40 yen on Friday, its lowest level since 2016.

The growing policy divergence pushes the yen to deeply undervalued levels against the US dollar.

The euro gained ground against the dollar on the day, rising 0.1 percent to $1.10585.

The post Dollar Dips Amid Ukraine War appeared first on forexinsider24.com.

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