Dollar falling, BOE and ECB follow Fed’s Hawkish lead while BOJ remains in Investing.com

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Written by Gina Lee

Investing.com – The dollar fell on Friday morning in Asia, still under pressure as investors digest the surprise of the Bank of England (BOE) and the European Central Bank (ECB) took a hawkish stance.

The one that tracks the dollar against a basket of other currencies fell 0.03% to 95,990 at 22:26 ET (3:26 GMT).

The pair rose 0.06% to 1.3326, while the pair fell 0.06% to 113.64.

The pair fell 0.18% to 0.7170 and the pair fell 0.21% to 0.6783.

The pair rose 0.04% to 6.3698.

Key central banks have adopted different policies as uncertainty remains over the impact of the omicron variant of COVID-19 on economic recovery. The debate on the extent to which central banks should take action to curb high inflation continues.

The pound climbed to as much as $ 1.33755 for the first time since Nov. 24 during the previous session, after interest rates rose to 0.25% in a sudden move as it made its policy decision on Thursday. It is now the first key central bank to raise interest rates since the start of the COVID-19 pandemic.

Meanwhile, the euro strengthened around the $ 1.13315 mark, after reaching its highest level in December, at $ 1.13605. In his own policy decision on the same day as the BOE, he announced plans to reduce assets over the coming quarters. However, the central bank also stressed policy flexibility.

“The ECB’s cautious decline and surprising BOE increase are likely to leave the dollar index difficult in the short term, especially given the awkwardly long positioning of the dollar by the end of the year,” Westpac analysts said in a note.

“But the weakness probably doesn’t extend beyond the low 95s” for the dollar index, with the US Federal Reserve “streets ahead” of the ECB in terms of a tightening cycle, and declines to mid-95s are buying opportunities, the note added.

He reversed the hawk in his latest policy decision, made Wednesday. The central bank will accelerate its asset reduction program by the end of March 2022, while predicting a rate increase of three-quarters of a point that year.

In the Asia-Pacific region, it kept its interest rate at 0.10% as it made its policy decision earlier in the day. Although within the expectations of investors, inflation is still well below the central bank’s target.

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