Dollar steadies as markets await Fed and BOJ policy signals

The dollar edged up from two-week lows but remained on track for its biggest weekly drop in a month as investors weighed U.S. tariff talks and awaited central bank meetings next week.

Both the Fed and BOJ are expected to hold rates, but traders will scrutinize their guidance for future moves. The yen hovered at 147.20 per dollar, set for a 1% weekly gain, though it weakened slightly as markets assessed Japan’s policy outlook and political uncertainty.

The dollar index stood at 97.448, down 1% this week – its worst performance in a month. The euro held near $1.174, not far from a four-year high, supported by fading U.S. tariff risks.

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BOJ rate hike in focus
CBA strategist Carol Kong said the BOJ meeting will be key for hints on a potential rate hike, which gained traction after a U.S.-Japan trade deal eased auto tariffs. However, sources say timing depends on whether Japan’s economy can handle U.S. tariff impacts.

Fed in the spotlight
Markets ignored Trump’s rare Fed visit, where he criticized Powell on rates and building costs. TD Securities noted the focus remains on next week’s meeting, where Powell is expected to stay patient but non-committal on cuts. Traders foresee 43 bps of cuts by 2025, with ANZ predicting two 25-bp cuts this year.

Elsewhere:

• Aussie dollar held near an 8-month high at $0.6593 on trade optimism.
• Bitcoin fell 2.6% to $115,644, while Ether dropped 3.3%.