The U.S. dollar steadied in Asian trading Thursday as traders weighed differing rate expectations ahead of five central-bank decisions next week, a busy stretch that could shape currency moves.
Reuters tied investors’ dollar exposure to the view that spending on artificial intelligence could keep U.S. growth firm and monetary policy restrictive. The agency said markets expected the Federal Reserve, European Central Bank and Bank of Japan to hold rates, while investors anticipated increases in Canada and New Zealand. Those are market expectations, not official decisions.
On Sept. 16, the Fed lifted its target range by 25 basis points, to 3.75%-4.00%. It meets Oct. 27-28, and Reuters reported that traders expect no change at that meeting, followed by an increase in December.
Sterling and the Canadian, Australian and New Zealand dollars had recently gained against the U.S. currency, Reuters reported. In the United Kingdom, the Office for National Statistics said annual consumer price inflation rose to 3.5% in September from 3.1% in August. It identified transport, especially motor fuels, as the largest upward influence on the annual-rate change.
Stats NZ reported that annual inflation eased to 3.7% in the September quarter from 4.1% in the June quarter, remaining above the Reserve Bank of New Zealand’s 1%-3% target band. Statistics Canada said annual inflation reached 3.1% in September, up from 3.0% in August. Both central banks have decisions scheduled for Oct. 28; Reuters reported that markets expected rate increases.
The ECB meets Oct. 28-29, and the Bank of Japan meets Oct. 29-30. Reuters said investors expect both to keep rates unchanged next week, while markets anticipate the Japanese rate reaching 1.5% early next year.
Andrew Hauser, deputy governor of the Reserve Bank of Australia, said Oct. 21 that higher rates can slow economic activity and weaken labor markets as central banks work to contain inflation. He cited oil prices, AI-related demand and domestic capacity limits as inflation risks, adding that oil was about one-third higher than assumed in the bank’s August projection. The next decisions begin with the Fed on Oct. 27-28.
