Dollar heads for a monthly loss

Dollar is heading towards incurring a second consecutive monthly loss today, Friday, amid growing expectations that the Federal Reserve (the US central bank) may soon end the cycle of sharply raising interest rates, while the yen settled near the highest level in a week ahead of an important decision by the central bank.

According to “Reuters”, all eyes in Asia will be on the Bank of Japan’s monetary policy decision on Friday, as it is expected that the new central bank governor, Kazuo Ueda, will maintain very loose monetary policy.

Prior to the decision, the Japanese yen recorded a slight increase of about 0.1 percent to 133.84 against the dollar, and it rose more than 0.1 percent against the pound sterling.

“I don’t expect the Bank of Japan to change its monetary policy this time, but the recently released Tokyo CPI was higher than expected… and I think this puts pressure on the Bank of Japan,” said Tina Teng, market analyst at CMC Markets. Japan, and may do something in the near future

Government data showed on Friday that core consumer prices in Tokyo rose 3.5 percent in April from the same month last year, exceeding market expectations, in a sign of widening inflationary pressures in the world’s third-largest economy.

The dollar fell against most major currencies, but its losses were limited by data indicating continued inflation in the world’s largest economy, which reinforced expectations of an interest rate hike of 25 basis points at the Federal Open Market Committee meeting next week.

Data released on Thursday showed that while US economic growth slowed more than expected in the first quarter of the year, consumer spending accelerated, accompanied by a rise in inflation.

Dollar index recorded in the latest reading 101.45 against a basket of currencies, and is heading to record a new monthly loss of more than 1 percent, after it fell about 2.3 percent in March.

The pound sterling fell 0.06 percent to $1.2492

And the euro settled near the highest level in a year, and recorded in the latest transactions 1.1033 dollars. It looks forward to achieving monthly gains of close to 2 percent

The single currency received support from expectations that the European Central Bank still has more interest-raising decisions ahead of it

“Investors prefer currencies that can present a sustained domestic tightening cycle and still have room for a sudden sharp tightening at upcoming meetings,” said ING analysts.

The Australian dollar rose 0.05 percent to $ 0.66335, and its New Zealand counterpart rose 0.07 percent to $ 0.61515.