The U.S. dollar steadied on Monday after two consecutive weeks of declines, as global markets entered a high-stakes week packed with central bank decisions — led by the U.S. Federal Reserve, where an interest rate cut is widely expected but clear divisions within the committee keep uncertainty high.
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In addition to the Fed’s decision due Wednesday, policy meetings are scheduled in Australia, Brazil, Canada and Switzerland. No major moves are anticipated from these central banks, making the Fed the focal point for investors.
The euro held at $1.1644, continuing its tight trading pattern seen since June. The Japanese yen traded at 155.28 per dollar, stabilising after a sharp slide in November.
Analysts anticipate a “hawkish cut” from the Fed — a rate reduction accompanied by tougher language that signals caution on further easing. Such messaging could strengthen the dollar if it forces markets to scale back expectations of two or three additional cuts next year.
“We expect to see some dissents, potentially from both hawkish and dovish members,” said Bob Savage, head of markets macro strategy at BNY.
The Australian dollar paused just below last week’s two-and-a-half-month high at $0.6640, after climbing steadily through key technical levels. The Reserve Bank of Australia meets Tuesday following strong releases on inflation, GDP and consumer spending. Markets now expect the next move to be a hike, possibly as early as May.
“We expect the RBA to be on an extended hold, with the cash rate remaining at 3.60%,” ANZ analysts said, revising their earlier view that cuts were likely.
In Canada, the loonie surged to a 10-week high last Friday after robust labour market data. The Bank of Canada is expected to keep rates unchanged this week, though a hike is fully priced in by December 2026. The currency eased slightly to C$1.3829 on Monday.
Elsewhere, the New Zealand dollar traded at $0.5779, while the Swiss franc dipped 0.1% to 0.8045 per dollar, as subdued inflation is expected to keep Swiss rates at 0% for an extended period.
Sterling remained near its 200-day moving average at $1.3324, and China’s offshore yuan held at 7.068 per dollar.
In Brazil, the central bank is expected to maintain the policy rate at 15%, though officials may signal the possibility of a cut in the next quarter.
