By Zhang Mengying
Investing.com – The dollar was higher Wednesday morning in Asia as central banks around the world are expected to prepare to tighten policies to control inflation.
The US dollar index which tracks the greenback against a basket of other currencies gained 0.28% to 102.60 at 12:23 p.m. ET (4:24 a.m. GMT).
USD/JPY jumped 0.40% to 133.12. The yen continued to decline after hitting a 20-year low as the Bank of Japan (BOJ) gave no indication of abandoning ultra-accommodative monetary policies.
However, the Japanese economy seems to be rebounding. Government data released earlier today showed Japan’s gross domestic product (GDP) fell 0.5% in January-March year-on-year, lower than the initial reading of the decline of 1, 0% posted last month.
“Yield differentials continue to favor the US dollar, with USD/JPY rising above 132,” Matt Simpson, senior market analyst at City Index, told Reuters.
“It’s quite obvious that the BOJ prefers to defend yield curve control over a weaker currency,” he said. “135 is the next major line in the sand – February 2002 high.”
AUD/USD fell 0.33% to 0.7204, and NZD/USD slipped 0.39% to 0.6464. The Reserve Bank of Australia (RBA) announced a surprisingly large rate hike on Tuesday. He raised interest rates to 0.85%, above the 0.60 forecast prepared by Investing.com.
USD/CNY edged up 0.04% to 6.6737, while GBP/USD edged down 0.16% to 1.2568.
US 10-year yields remained below 3%.
The European Central Bank (ECB) will meet on Thursday and deliver its policy decision which should lay the groundwork for further interest rate hikes.
US Treasury Secretary Janet Yellen said on Tuesday she expects inflation to remain high, and the Biden administration is expected to raise the inflation forecast to 4.7% for this year in its proposal. budget.
The global economic outlook remained bleak. The World Bank cut its estimate for global growth this year to 2.9% from a January forecast of 4.1% due to soaring commodity prices, supply disruptions and measures taken by central banks to raise interest rates. Investors are now looking to Friday’s U.S. Consumer Price Index (CPI) for more clues on the U.S. Federal Reserve’s interest rate hike path.
“With quantitative tightening replacing quantitative easing and 100 basis points of Fed rate hikes coming this summer, you buy bonds and sell dollars at your own risk,” strategist Kit Juckes told Reuters. Societe Generale.
Dollar up as central banks step up tightening policies
Pound’s jaunt on political noise comes to an end as BoE and recession fear to return
Dollar plunges as hopes rise that inflation has peaked