Dollar Drops with The Yen in Demand

The Dollar Index follows the dollar versus a basket of six other currencies. At 03:00 ET (08:00 GMT), it dropped 0.3% to 104.035.

As local Japanese media reported over the weekend, Prime Minister Fumio Kishida thought about issuing a joint statement with the Bank of Japan at some point in the future. This caused the USD/JPY to decline 0 points, or 6%, to 135 points. This would permit more flexibility around the 2% inflation goal.

Such a move would likely mean a policy shift in the central bank’s ultra-accommodative perspective. It has witnessed Japanese interest rates adhere to near zero. In distinction, other major central banks have aggressively hiked rates to fight skyrocketing inflation, to the disadvantage of the yen.

The BoJ Has A Meeting

The BoJ holds its final conference for the year early Tuesday and should hold interest rates at ultra-low levels. Nevertheless, any commentary on a potential shift in tone will be near watched.

The Fed, the ECB, the BoE, and the SNB, among others, increased interest rates by 50 bps last week and hinted at further hikes ahead, with inflation remaining highly raised.

EUR/USD climbed 0.5% to 1.0634, ahead of December’s departure of the German Ifo business climate index.

Following last week’s PMI data, this is anticipated to show a slight improvement to 87.4 from 86.3. It indicated that the downturn in German economic activity moderated for a second consecutive month, signaling a likely recession in the bloc would be more superficial than formerly thought.