The week ahead is shaping up to be quite important for the US dollar. On Wednesday, the Federal Reserve will hold a policy meeting, where the central bank is likely to discuss a possible further decrease of the interest rate in the country.
This year the Fed has slashed rates twice, in an approach vastly different from what they have been doing for the past ten years. Recent disappointing fundamentals from the United States have prompted investors to expect a third rate adjustment to protect the economy. According to how the dollar’s been trading, the rate cut is already priced in, so the USD is able to grow in price despite the possible rate cut.
Across the Pacific, the Bank of Japan will also be meeting this week to discuss the country’s economy. It has been in a state of recession for a while and even the ultra soft policy of the central bank has not helped. It is unclear if the BoJ will take steps to soften it even further.
The British pound was able to strengthen against the dollar slightly (1.2848), largely due to hopes for a Brexit delay. EU leaders did not decide anything final on Friday but today they have to reveal if and what kind of extension they will give to the United Kingdom.
