The Federal Reserve should be cautious on interest rate increases due to lingering risks to the U.S. economy, one of its most influential policymakers said today, appearing to signal the chance of a hike by the end of the year was fading.
Signs of a larger than previously expected fiscal stimulus plan for Japan had the yen back on the defensive today, as investors bet the Bank of Japan (BOJ) would match that with a new bout of money-printing aimed at weakening its currency.
The dollar held within sight of recent highs against the euro and yen today ahead of meetings of U.S. Federal Reserve and the Bank of Japan that investors on balance expect to be positive for the greenback.
Central banks from Washington to Tokyo take center stage next week, although policymakers are likely to remain cautious as they wait for the dust to settle from Britain's shock vote to leave the European Union.
Surveys that suggested the UK economy may start to contract in quarterly terms after last month's Brexit vote dominated trade on major currency markets today, knocking almost 1% off sterling across the board.
The dollar rose to a one-week high against the yen on Monday, climbing almost 2%, following Japanese Prime Minister Shinzo Abe's call for a fresh round of fiscal stimulus after a victory for his ruling coalition in local elections.
Japanese Prime Minister Shinzo Abe pledged today to use all available policy tools to keep the wheels of the economy turning as financial markets were gripped by uncertainty in the wake of Britain's shock vote to exit the European Union.