NEW YORK (MarketWatch) — The dollar weakened against its rivals Wednesday morning as the Bank of Japan left monetary policy unchanged and Federal Reserve Governor Jerome Powell said he expects the central bank to raise interest rates later this year.
The euro EURUSD, +0.03% traded at $1.0858, compared with $1.0824 Tuesday. The dollar USDJPY, -0.27% traded at 119.76 yen, compared with ÂĄ120.30.
In a day devoid of important economic data, traders awaited the release of minutes from the Fed’s March meeting, when policy makers said increases to the Fed funds rate, its benchmark interest rate, would begin later, and occur more gradually than the market had expected.
Aluminum giant Alcoa Inc. AA, +2.08% is expected to release first-quarter earnings after the closing bell, marking the unofficial start to an earnings-reporting season that is expected to be the weakest overall in at least 2 1/2 years.
Adam Cole, global FX strategist at RBC Capital Markets, said poor U.S. earnings could weigh on the dollar.
“Any suggestions that earnings were pressured by weaker export margins or volumes will be potentially [dollar] negative,” Cole said in a note to clients.
Read: What to expect from Alcoa’s earnings
Speaking to the Council on Foreign Relations in New York, Powell said he expects economic conditions would justify a rate increase later this year. The dollar inched lower as he spoke.
Read: Fed’s Powell sees first rate increase later this year
Read: Fed’s Powell says not troubled by equity valuations
The WSJ Dollar Index BUXX, -0.39% a measure of the dollar against a basket of major currencies, was at 87.12. The ICE U.S. Dollar Index DXY, -0.46% a measure of the dollar’s strength against six rivals, was down 0.3% at 97.4990.
Bank of Japan policy makers voted 8-1 to maintain the central bank’s program of asset purchases, saying the country’s economy remained on track to hit an inflation target of about 2% by the middle of next year.
