Currencies Steady Amid Global Trade Talks and Central Bank Meetings

The dollar remained steady near its two-week low on Friday, on track for its largest weekly decline in a month. This comes as investors weigh ongoing U.S. tariff negotiations and anticipate next week's central bank meetings for insights into future policy directions.

The Federal Reserve and the Bank of Japan are expected to maintain current interest rates at their upcoming policy meetings, yet market participants remain focused on the comments that follow these meetings. Currency strategist Carol Kong from the Commonwealth Bank of Australia noted that the BOJ's meeting would be closely watched for any indications regarding the timing of the next rate hike.

Following a trade agreement with the United States that reduced tariffs on Japanese auto imports, expectations for a BOJ rate hike have improved. In parallel, the dollar index experienced a 1% weekly drop. As U.S. Treasury Secretary Scott Bessent plans talks with Chinese officials, the Australian dollar rallies, reflecting market optimism.

(With inputs from agencies.)