Dollar Edges Higher; Federal Reserve Dominates Central Bank Week

By Peter Nurse - The U.S. dollar edged higher Monday, remaining near a 20-year high at the start of a week dominated by a number of central bank meetings, including a crucial Federal Reserve gathering.

At 03:10 ET (07:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.3% higher to 109.793, not far removed from the two-decade peak of 110.79 reached on Sept. 7 for the first time since mid-2002.

The main focus of attention this week will be on the U.S. Federal Reserve, which is scheduled to start its latest two-day policy-setting meeting on Tuesday.

The hotter-than-expected U.S. consumer prices for August have cemented expectations for another large rate increase at the conclusion of its meeting on Wednesday. A 75-basis-point rate hike is widely expected, but some investors are bracing for a full percentage point hike, and it’s this possibility which is keeping the dollar fully supported.

“We expect a third consecutive 75bp hike,” said analysts at ING, in a note. “High inflation means 100bp is a risk, but inflation expectations and corporate price plans look less threatening and the growth outlook is more uncertain so we don’t see it. Still, a more hawkish message surrounding sticky inflation will see the Fed dots closer reflect the market pricing of a 4.25-4.5% terminal rate.”

The Fed isn’t the only central bank meeting this week – policymakers in the U.K., Switzerland, Norway and Japan will also meet during the week as the global fight against inflation intensifies.

USD/JPY rose 0.3% to 143.28, in quiet trading with Japan on holiday and ahead of Thursday’s Bank of Japan meeting. The Japanese central bank is very likely to stick with its very loose monetary policy, which has weighed heavily on the year.

That said, the central bank may say something about yen weakness amid speculation that Japanese authorities are close to intervening in the foreign exchange market to support the weak currency, which hit a 24-year low against the dollar earlier this month.

Elsewhere, the Bank of England, the Swiss National Bank and the Norges Bank are all expected to hike interest rates even as growth in Europe weakens substantially.

The World Bank warned last week that the world’s economy has been slowing sharply, and even a "moderate hit to the global economy over the next year could tip it into recession." 

EUR/USD fell 0.5% to 0.9970, GBP/USD dropped 0.2% to 1.1385 and the risk-sensitive AUD/USD dropped 0.5% to 0.6684.

USD/CNY rose 0.4% to 7.0103, with the pair climbing to an over two-year high, remaining above the psychologically-important 7 level after the People’s Bank of China cut a repo rate on Monday, attempting to support an economy that was severely dented by COVID-related lockdowns. 

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    EC2A 2BN
    United Kingdom

    T:  + 44 ( 0 ) 203 857 2000
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    United Arab Emirates
    T: + 00 971 44 22 888

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: