By Gina Lee
Investing.com – The dollar was up on Monday morning in Asia. However, moves were small as key Asian markets were closed and a slew of central banks, including the U.S. Federal Reserve, prepare to hand down their latest policy decisions.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.06% to 93.282 by 11:16 PM ET (3:16 AM GMT).
The USD/JPY pair inched down 0.01% to 109.95.
Chinese and Japanese markets were closed on Monday. Investors now wait for the Fed to hand down its latest policy decision on Wednesday for clues on the asset tapering and interest rate hike timelines.
“The dollar is having a bit of a rebound,” Westpac analyst Imre Speizer told Reuters, with the U.S. currency drawing support both from an expectation of imminent asset tapering from the Fed and from caution as a rally in global shares starts to cool.
“Everyone is eying the Fed, waiting for a tapering signal, he added.
Central banks in Japan, the U.K., Switzerland, Sweden, Norway, Indonesia, the Philippines, Taiwan, Brazil, South Africa, Turkey and Hungary will also hand down their policy decisions throughout the week.
It would only take two Fed members to change their minds for the “dot plot” of median projections to reflect hikes in 2022, according to BDSwiss’s Marshall Gittler.
“So it’s quite possible that they go from forecasting no rate rises in 2022 to at least one. Similarly, they are now forecasting two hikes in 2023 that could easily go to three as well,” he told Reuters.
The Canadian dollar was on a downward trend ahead of the federal election later in the day. Incumbent Prime Minister Justin Trudeau is widely predicted to win, but will likely lead a minority leader.
Voters in Germany will also cast their ballots on Sep. 26.
In Asia Pacific, the Chinese yuan came under pressure offshore, with the focus on whether China Evergrande Group (HK:3333) will be able to make good on its bond interest payment of $83.5 million due on Thursday. China’s slowing economic recovery and recent regulatory tightening also added pressure to the yuan.