Home Forex A Weaker Dollar Pushes Aussie, Kiwi Higher Ahead of Fed Meeting

A Weaker Dollar Pushes Aussie, Kiwi Higher Ahead of Fed Meeting

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The dollar was weaker against a basket of major currencies on Monday, allowing the kiwi and Aussie to advance as oil prices climb higher and markets brace for central bank policy meetings in the U.S. and Japan.

The kiwi and Aussie, commodity-linked currencies, benefited from stronger oil prices, with crude oil up 1.5% on speculation of OPEC production controls. Venezuela said that OPEC and non-OPEC members had nearly reached a deal on stabilizing oil output.

The Aussie was further supported by upbeat housing data out of China, which showed house prices were up 9.2% in August, beating July’s year-on-year increase of 7.9%.

The Australian dollar was trading up 0.68% against its U.S. counterpart, at 0.7539. The New Zealand dollar was at .07307, up 0.55%, this morning.

With expectations of a rate hike at this month’s Fed meeting near zero, the dollar has weakened despite upbeat inflation data last week. While market players are pricing in on a 12% chance of a rate hike this month, the general consensus is that Fed officials will start to set things in motion for an increase in December.

The euro climbed against the dollar, trading 0.10% higher at 1.1166. The pound was stronger against the greenback, too, trading 0.36% higher at 1.3048.

The dollar index was down 0.3% to 95.846 this morning.

In Japan, the yen saw gains ahead of the Bank of Japan’s monetary policy meeting this week. The currency was supported by expectations that any policy announcements would not be strong enough to weaken the yen.

Analysts speculate that unless major policy easing is announced, the yen will continue to strengthen. Market players have largely lost confidence in Tokyo’s ability to weaken its currency.

The yen was 0.4% higher against the dollar in European trade this morning despite thinner trade in Asia. Japanese markets are closed due to a holiday.