SINGAPORE- The dollar was steady on Monday as traders looked ahead to a week dominated by central bank meetings worldwide, with the Bank of Japan seemingly on the brink of ending negative rates and the focus on how many rate cuts the Federal Reserve projects.
Apart from Japan and the United States, central banks in England, Australia, Norway, Switzerland, Mexico, Taiwan, Brazil and Indonesia are all due to meet, with most expected to stand pat on rates.
The spotlight in Asia is firmly on the BOJ as the bigger-than-expected pay hikes by major Japanese firms cemented expectations that the central bank is set to herald a new era by ending its negative interest rate policy, potentially as soon as Tuesday.
Internal preparations for an exit have been in the works since Kazuo Ueda took office as BOJ governor in April last year, and were mostly done by year-end, sources familiar with the bank’s thinking told Reuters.
On Monday, the Japanese yen was a tad soft at 149.13 per dollar, having hit its lowest in more than a week of 149.33 earlier in the session. The Asian currency has had a whirlwind past few weeks, weakening to 150.88 last month and leading to worries over intervention by Japanese authorities.
But rising speculation that Japan’s central bank may be getting ready to shift away from its ultra easy monetary policy boosted the yen, taking it to a one-month high of 146.48 per dollar at the start of the month.
Latest weekly data from the US markets regulator shows speculators hold a net short yen position worth $8.66 billion, down from $11 billion they held at the start of the month.
There is still a possibility that the BOJ may choose to wait till its April meeting to make the move, with markets pricing in 39 percent chance of the central bank taking the policy rate to 0.0 percent from -0.1 percent on Tuesday.
