Dollar weakens against yen in week packed with data releases and central bank decisions
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NEW YORK/LONDON, Dec 15 : The U.S. dollar weakened against rivals including the yen, euro and Swiss franc in a week packed with central bank decisions and U.S. data that could shed light on the Federal Reserve's near-term policy outlook.
The dollar was last down 0.6 per cent against the yen, trading just below 155 to the dollar.
The Bank of Japan is widely expected to raise interest rates on Friday, giving the yen an advantage over a dollar that could lose support if expected U.S. rate cuts emerge early next year.
"Our economists shifted to expecting a December hike from the BoJ in their base case," Goldman Sachs analysts led by Alexandra Kanter wrote in an investor note.
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"The guidance will be key for near-term direction, and a recent report suggests that there may be less emphasis placed on the bank’s estimate of the neutral rate."
The BoJ is likely to maintain a pledge to keep raising interest rates but emphasise that the pace of increases will depend on how the economy reacts to each, sources told Reuters.
The Bank of England and European Central Bank are among central banks making monetary policy decisions this week.
Markets have almost fully priced in a Bank of England cut as inflation finally shows signs of easing while the ECB is expected to leave rates unchanged.
Traders have begun speculating that a rate increase could be on the cards for the ECB in 2026.
Sterling was steady at $1.33925 while the euro was up 0.21 per cent at $1.176325, on track for a fourth straight session of gains.
"In terms of the BoE, I think it's going to be very interesting. I think it's going to be a finely balanced decision to cut," said Joseph Capurso, currency strategist at Commonwealth Bank of Australia.
"The risk is that the inflation data that comes out this week may take out some of the pricing for follow-up rate cuts."
UK wage growth data is due on Tuesday and consumer inflation on Wednesday.
US DATA IN SPOTLIGHT
A catalogue of U.S. data delayed by the government shutdown is set to be released, giving investors a long-awaited view of the world's largest economy. The November jobs report is due on Tuesday and inflation figures on Thursday.
A divided Fed cut rates last week, but Chair Jerome Powell signalled that borrowing costs were unlikely to drop further in the near term.
U.S. President Donald Trump said on Friday that he was leaning towards either former Fed Governor Kevin Warsh or National Economic Council Director Kevin Hassett to lead the central bank next year.
The dollar weakened by 0.15 per cent to 0.795 against the Swiss franc. The dollar index, which measures the U.S. currency against a basket of rivals including the yen and the euro, fell by 0.21 per cent.
Sweden's Riksbank and Norway's Norges Bank are expected to leave interest rates unchanged after their policy meetings this week.
The Swedish crown strengthened by 0.28 per cent to 9.275 to the dollar. Against the Norwegian crown, the dollar was flat at 10.129.
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