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Yen Stronger, Dollar Steady Ahead of Central Bank Meetings

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Exchange rating. Currency sign yen and dollar.

The yen strengthened on Friday in Asia while the dollar held steady ahead of central bank meetings next week. The greenback was under pressure after downbeat data released on Thursday.

Both the Bank of Japan and the Federal Reserve will hold their monetary policy meetings next week.

A new report from the Commerce Department showed that retail sales in the U.S. fell 0.3% in August, missing expectations of a 0.1% drop. The decline was the first in several months.

Separately, the Department of Labor announced that the number of Americans who applied for unemployment benefits rose less than expected in the week ended September 9. The report indicated that the labor market was tightening further.

The Labor Department also reported that U.S. producer prices were flat last month.

With retail sales down more than expected and producer prices being flat, market players are not anticipating the Federal Reserve raising rates at its next policy meeting next week.

On Monday, Federal Reserve Governor Lael Brainard asked for prudence when considering raising rates in the near-term.

Expectations of a rate hike typically strengthens the dollar, as the currency is more attractive to yield-seeking investors. The unlikelihood of a rate hike at the Fed’s next meeting has kept the dollar from gaining strength on Friday.

The dollar index was at 95.39 overnight.

The euro was trading at 1.1248 against the dollar, while the greenback was trading down 0.08% at 102.00.

The pound was down 0.32% against the dollar, trading at 1.3194, while the Aussie fell 0.09% against its U.S. counterpart at 0.7512.

Sterling was still under pressure after the Bank of England made the decision to hold rates at its latest policy meeting. However, the central bank indicated that it may cut rates again as early as November unless the economy shows signs of picking up steam.

 

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