Central Bank Meetings and Economic Data to Steer Currencies

The dollar experienced a slight increase on Monday, stabilizing after recent losses in anticipation of the Bank of Japan meeting and upcoming data releases ahead of the Federal Reserve and European Central Bank rate decisions in May.

Pound and Euro Fail to Maintain Highs

The pound and euro were unable to maintain their mid-April highs, with GBPUSD down 0.2% and the euro down 0.1%. The dollar index, which hit a one-year low on April 14, showed a 0.12% increase.

Focus on Fed and ECB Policy Decisions

With the Fed and the ECB set to meet in early May, markets are closely watching U.S. first-quarter GDP and PCE data for signs of economic strain and evidence of inflation to predict future policy moves.

German Business Morale Shows Moderate Increase

The Ifo Institute reported a slight rise in German business morale due to improved expectations, but the economy remains slow. The Ifo business climate index increased to 93.6 from a revised 93.2 in March, a weaker-than-expected growth.

Business Activity Gathers Pace in the U.S. and Euro Zone

Data from Friday revealed increasing business activity in both the U.S. and the eurozone, alleviating concerns about an impending recession. However, markets are still awaiting signs of subsiding price pressures for rate cut predictions.

ECB Expected to Raise Rates

The market expects the ECB to raise rates by a quarter point, with the possibility of a 50bp hike. Upcoming euro zone inflation and growth data will also impact this decision.

Bank of Japan's Policy Meeting Under New Governor

The Bank of Japan's policy meeting on Friday, chaired by new BOJ Governor Kazuo Ueda, is expected to maintain the current ultra-easy yield curve control policy. The BOJ remains cautious about abandoning this policy as it evaluates the impact of recent banking stress on Japan.