Key facts
- Investors are positioning ahead of central bank meetings next week.
- Hawkish holds are expected from the Fed, ECB, and BoJ.
- The euro is seen as a favored channel for betting on a stronger dollar.
- French 10-year yields reached their highest since 2022 amid unrest.
The dollar's recent decline paused on Thursday as investors awaited a series of central bank meetings next week, where interest rates are expected to remain unchanged but with hawkish undertones. Investors have been scaling back bets on the dollar, with sterling, the Australian dollar, and the New Zealand dollar seeing recent gains. Sterling hit a one-month high earlier in the week, supported by hotter-than-expected inflation. The Australian dollar held above 70 US cents, while the New Zealand dollar reached a one-month high on expectations of a rate hike. The Bank of Canada was also near a one-month top. The euro has been sliding against the dollar due to fiscal concerns in France and Europe's energy fragility, with French 10-year yields hitting their highest since 2022 amid weekend unrest. However, the euro has remained relatively steady above $1.12, with market positioning seen as offsetting negative news.