Dollar Firm Ahead of Central Bank Decisions: What Investors Need to Know for Market Stability in Oman
TOKYO – The US dollar maintained its gains against major currencies on Thursday as global markets prepared for key central bank decisions in the UK, Europe, and Japan.
The British pound continued to face downward pressure following an unexpected decline in UK inflation, which increased expectations that the Bank of England (BoE) will implement a rate cut. Meanwhile, the Japanese yen slightly recovered from previous losses as the Bank of Japan (BOJ) commenced a two-day policy meeting, where a rate hike to a three-decade high is widely anticipated.
The dollar index, which measures the greenback against a basket of major currencies, remained steady at 98.39 after a 0.2% gain in the previous session.
The dollar showed little reaction to remarks by President Donald Trump, who suggested that the next Federal Reserve chair would likely support lower interest rates. Market analysts noted that the weak UK inflation figures had effectively locked in expectations of a quarter-point rate cut by the BoE later Thursday.
The yen declined by 0.1% to 155.87 per dollar, extending losses from Wednesday. Against the Swiss franc, the yen weakened to 195.96, nearing a record low. The euro stayed stable at $1.1744, while sterling held firm at $1.3367 after a 0.4% drop in the previous session.
Interest rate futures now price in an almost 100% probability of a BoE rate cut. The European Central Bank is expected to maintain current rates and signal limited willingness to ease monetary policy. In Asia, the BOJ is widely expected to raise short-term rates from 0.5% to 0.75%, as elevated food prices keep inflation above the central bank’s 2% target.
Japanese Prime Minister Sanae Takaichi emphasized the need for proactive government spending to support economic growth and tax revenue, underscoring efforts to stabilize the economy. Some analysts predict the BOJ could raise rates twice in 2026 to counter persistently negative real interest rates.
In the United States, uncertainty persists regarding the timing of the next Federal Reserve rate cut amid questions about the central bank’s independence, as President Trump considers potential successors to Fed Chair Jerome Powell. Fed Governor Christopher Waller indicated there is room for rate cuts amid labor market weakness, while Atlanta Fed President Raphael Bostic expressed doubts about the necessity of last week’s rate cut.
President Trump announced he will soon name his nominee to replace Powell, adding that his choice will strongly favor lower interest rates.
Elsewhere, the Australian dollar inched up 0.05% to $0.6607, while the New Zealand dollar declined 0.2% to $0.5762 despite data showing a return to economic growth in the third quarter.
In cryptocurrencies, bitcoin rose 0.6% to $86,509.67, and ether gained 0.3% to $2,828.33.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The anticipation of rate cuts by the Bank of England and potential rate hikes by the Bank of Japan signals heightened global monetary policy volatility, which could impact Oman’s trade and investment flows. Businesses in Oman should brace for currency fluctuations and altered capital costs, while smart investors might find opportunities in diversified portfolios that hedge against such geopolitical and interest rate uncertainties. Staying agile and informed on international central bank decisions will be critical for Oman’s financial and export sectors in the near term.
