Precise Investors Editorial Team
The yen softened slightly to 155.76 after a 0.6% decline on Wednesday, the euro was little changed at $1.1739, while sterling was also steady at $1.3367 after a 0.4% decline the previous day
The dollar held gains against its counterparts on Thursday as markets positioned for central bank decisions in Britain, Europe and Japan.
Sterling remained lower after an unexpected drop in UK inflation backed the case for a rate cut by the Bank of England. The yen trimmed losses from the previous session as the Bank of Japan starts a two-day meeting that is expected to result in a hike in policy rates to a three-decade high.
The dollar took in stride comments from U.S. President Donald Trump that the next head of the Federal Reserve will believe in lower interest rates “by a lot.”
There’ll be a generally stronger dollar, said Ray Attrill, head of FX strategy at National Australia Bank. The surprisingly weak UK inflation readout in the prior session has sealed the deal for a BOE rate cut later today.
The yen softened slightly to 155.76 after a 0.6% decline on Wednesday.
The euro was little changed at $1.1739, while sterling was also steady at $1.3367 after a 0.4% decline the previous day.
Interest rate futures have priced in a near 100% chance of a quarter-point rate cut from the BoE on Thursday following the surprisingly weak November inflation data in the UK. The European Central Bank is widely expected to hold rates steady and signal little appetite for cuts in the near term when it meets on Thursday.
Over in Asia, the BOJ is all but certain to raise short-term interest rates to 0.75% from 0.5% at a two-day policy meeting ending on Friday, as high food costs keep inflation above the central bank’s 2% target.
Japan must pursue proactive spending that will boost growth and tax revenues, Prime Minister Sanae Takaichi said on Wednesday, reiterating her administration’s focus on shoring up a fragile economy.
The BOJ may raise rates twice in 2026 to contend with persistent, real negative interest rates, according to Vincent Chung, a Hong Kong-based fixed-income portfolio manager at T Rowe Price.
There are some expectations that BOJ would not be hawkish in forward guidance and lead to some weakness in the yen, but we believe that this would be temporary, Chung said.
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