Dollar index slips near 98.8 as yen extends gains
The dollar index slipped to around 98.8 for a second straight session as the yen extended gains on expectations for more aggressive Bank of Japan tightening. Investors focus on US inflation data ahead of the Fed meeting.
8 on Tuesday, falling for a second straight session as the yen added to gains on expectations of more aggressive monetary tightening by the Bank of Japan and continued unwinding of carry trades. In the US, investors are focused on inflation data due this week, which may offer more clarity on the interest-rate outlook before the Federal Reserve's policy meeting next week. Markets are pricing in roughly a 60% chance of a 25-basis-point Fed rate hike next week after stronger-than-expected jobs data on Friday. The European Central Bank is also expected to raise interest rates this week.
Investors are also tracking developments in the Middle East, where renewed US-Iran fighting has pushed oil prices higher and kept inflation risks in focus.