LONDON (Reuters) -The dollar edged up on Friday to pull away from multi-month lows against the euro and sterling, as investors began to train their sights on a slew of major central bank meetings next week.
The U.S. Federal Reserve, European Central Bank and Bank of England are all due to make rate decisions next week as they judge what policy adjustments may be required in their battle with rampant inflation against a tough global economic backdrop.
Currency analysts said they did not expect big moves to end the week, with a key U.S. jobs report also in sight next Friday.
The dollar index, which measures it against six major currencies, gained 0.2% to 101.930, as the dollar moved away from near a nine-month low to the euro and a seven-month trough to sterling.
The euro was last down 0.1% versus the dollar at $1.08760, while sterling was down 0.4% at $1.23670.
“The failure of the dollar to break lower … suggests from a technical perspective that some turnaround is possible,” currency analysts at MUFG said in a note.
The yen, meanwhile, rose against the dollar as heated Tokyo inflation readings spurred bets that a hawkish pivot from the Bank of Japan (BOJ) could be in the offing.
The dollar lost 0.3% to 129.900 yen after data showed consumer price inflation in Japan’s capital accelerated to a nearly 42-year peak this month, piling pressure on the BOJ to step away from stimulus.
“Market expectations for changes at any time, including the next meeting in March, will remain high, and that will keep the yen bid,” said Shinichiro Kadota, a strategist at Barclays (LON:BARC) in Tokyo, who saw a possibility of the dollar-yen pair breaking below 125.
Traders broadly expect the Federal Reserve to increase interest rates by 25 basis points (bps) on Wednesday, a step down from a 50 bps increase in December. Meanwhile, the ECB has all but committed to raising its key rate by half a percentage point the following day.
The Bank of England faces a challenge in controlling inflation without damaging an economy already in recession. The bank will make its next policy decision on Thursday, and is seen increasing by a half point.
Source: Economy - investing.com
