As the World Economic Forum in Davos, Switzerland stretched into its second day of meetings and speeches on Wednesday, the US dollar’s persistent weakness was extended, pushing the US dollar index to new lows well below the 90.00 handle and EUR/USD up to new highs above 1.2400.
The Bank of Japan and European Central Bank are both scheduled to announce their latest monetary policy decisions this week – on Tuesday and Thursday, respectively. EUR/JPY will therefore be a logical focus of currency markets this week just as global central bankers, finance ministers, top government officials and business leaders will meet in Davo...
The week ahead will likely feature heightened volatility for currency markets, depending in part on developments in US government efforts to avert a shutdown, as well as two major central bank decisions.
For the second day in a row, the heavily-battered US dollar index showed signs of rebounding and rallying from extreme lows early in the day, only to pare those gains and dip into negative territory further into the trading day.
Amid the euro’s pullback this week from long-term highs against both the US dollar and Japanese yen, the Bank of Japan reduced its purchases of Japanese government bonds on Tuesday, leading to some knee-jerk speculation that the central bank could wind down its massive stimulus program at some point in the foreseeable future.