Sign in Subscribe
Banks (Finance)

Dollar Mixed Against Major Counterparts Amid Central Bank Policy Meetings

Strategic Insights

— 2 min read

The US dollar was trading mixed against major currencies on Tuesday, as investors awaited key policy decisions from the US Federal Reserve, the Bank of England, and the Reserve Bank of Australia. The pound sterling was lower against both the euro and the dollar, while the Australian dollar plummeted after the RBA dropped its yield target and hinted at a possible rate hike in 2023. Analysts attributed the market's shift in expectations to concerns over inflation and the need for central banks to take a more hawkish stance.

Key Takeaways:

  • The pound sterling was trading at USD1.3627 on Tuesday afternoon, down from USD1.3665 on Monday, as investors priced in expectations of a delayed rate hike or less ambitious tightening policies by the Bank of England.
  • The euro was firm against the dollar, trading at USD1.1584 on Tuesday afternoon, up from USD1.1570 on Monday.
  • The Australian dollar plunged after the Reserve Bank of Australia dropped its yield target and hinted at a possible rate hike in 2023, trading at AUD1.3418 on Tuesday, down sharply from AUD1.3291 on Monday.
  • The RBA left its cash rate at 0.1% and emphasized the need to be patient, citing concerns over sustained inflation above the 2-3% target range.
  • The US dollar was higher against commodity-focused currencies, including the Canadian loonie, which was trading at CAD1.2400 on Tuesday, up from CAD1.2375 on Monday.
  • The Reserve Bank of Australia's decision to drop its yield target and hint at a possible rate hike in 2023 led to a sharp decline in the Australian dollar.

Statistics:

  • The pound sterling was down 1.2 basis points against the euro on Tuesday.
  • The euro was up 0.6 basis points against the dollar on Tuesday.
  • The Australian dollar fell 12.9 basis points against the US dollar on Tuesday.
  • The Reserve Bank of Australia's cash rate was set at 0.1%.
  • The RBA's yield target for the April 2024 Australian government bond was dropped.

Sources:

  • Alliance News: "The dollar was mixed against major counterparts on Tuesday as the US Federal Reserve's two-day policy meeting gets underway, while pound was lower with the Bank of England rate decision on the horizon."
  • ActivTrades: "Analysts at ActivTrades explained: The pound is edging down against both the euro and the dollar during Tuesday trading..."
  • Western Union: "The Australian dollar has weakened after the Reserve Bank of Australia's monetary policy decision earlier this morning..."
  • Western Union: "Although the RBA took big steps towards unwinding its pandemic stimulus, and suggested rate hikes were possible in 2023, Governor Philip Lowe also emphasised the need to be patient."
  • Alliance News: "By Arvind Bhunjun; arvindbhunjun@alliancenews.com Copyright 2021 Alliance News Limited. All Rights Reserved."

Read more