GBBEF - Week Ahead: Enthusiasm For The Dollar Rekindled

2024-03-23 08:05:00 ET

Summary

• The Bank of Japan lifted its interest rate target for the first time in 17 years.
• The Swiss National Bank became the first G10 central bank to cut rates.
• The PBOC relented and allowed the dollar to rise above the CNY7.20 cap that has held it back this year.
• The central bank of Mexico delivered its first rate cut.
• The median projection for Federal Reserve officials maintained the three cuts for the year,.

Last week will be remembered for several things.

First, the Bank of Japan lifted its interest rate target for the first time in 17 years and formally ended its Yield Curve Control and ceased buying ETFs. The yen sold off and the dollar approach the 2022 and 2023 cap slightly below JPY152. Japanese officials have used the language that has signaled heightened risk of intervention in the past.

Second, the Swiss National Bank became the first G10 central bank to cut rates. Its low inflation and soft growth impulses provided a conducive backdrop, and there may be some tactical advantage in cutting before others to minimize the risk of the franc strengthening....

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