Dollar steadies as Fed looms; yen fragile

The dollar firmed on Monday after strong consumer spending data pointed to persistent underlying inflation pressure, cooling bets that the U.S. Federal Reserve could flag a slowdown in its aggressive interest rate hikes, Reuters reported.
Against the Japanese yen, the greenback was 0.44% higher at 148.08, particularly helped by the Bank of Japan’s (BOJ) decision to keep ultra-low interest rates on Friday, and BOJ Governor Haruhiko Kuroda’s still-dovish comments in the face of rising interest rates elsewhere.
The dollar moved broadly higher in early Asia trade, and was up more than 0.2% against the New Zealand dollar and the pound. It recouped some of last week’s losses, after having slid on hopes of a potential Fed change of tack.
“Markets have been kind of expecting a Fed pivot on monetary policy. I think that is too premature, given how resilient the economy has been and particularly how high inflation has been,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).
Data on Friday showed that U.S. consumer spending rose more than expected in September, while underlying inflation pressures continued to bubble.
The Fed is expected to deliver another 75 basis point (bp) rate hike after this week’s FOMC meeting, when policymakers announce their decision on Wednesday.