The dollar is heading towards its biggest monthly gain since September this Wednesday, while the yen is moving towards its largest decline in over a year as traders await the U.S. interest rate decision today. The sharp slowdown in inflation in Australia caused the Australian dollar to drop by 0.5% to $0.6567, and bonds rose as investors continued to bet on interest rate cuts. The dollar slightly increased to $1.0817 against the euro and stabilized at 147.67 yen during Asian trading.
The dollar has risen 2.2% against a basket of major currencies this month, as markets have reduced expectations for the speed and magnitude of interest rate cuts amid strong U.S. economic data and resistance from central bank governors. The yen has fallen more than 4.5% against the dollar this month, heading toward its largest monthly decline since June 2022, as weak wage data and slowing inflation allow the Bank of Japan to be cautious about raising interest rates.
The dollar index rose by 0.2% to 103.60 in the latest trades, while the British pound dropped by 0.2% to $1.2675. The Federal Reserve is expected to keep interest rates steady. The yuan remained stable at 7.1817 on Wednesday, declining by 1% during the month.
