Major Central Banks Reduce Weekly Dollar Swaps with Fed as US Dollar Gains Traction

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The US dollar is showing signs of strength as investors brace for a week of high-profile earnings and economic data releases. Market sentiment remains cautious, however, due to the approaching US debt ceiling deadline and uncertainty over the Federal Reserve's interest rate policy.

In a joint statement, the European Central Bank, Bank of Japan, Bank of England, and Swiss National Bank announced that they will reduce the frequency of their dollar operations with the Federal Reserve starting May 1. This move comes as financial market volatility has decreased, providing additional support to the US dollar.

Investors will be closely watching the first quarter Gross Domestic Product and Personal Consumption Expenditures Price Index, as well as mid-tier consumer confidence and housing data releases. Tech giants such as Alphabet, Microsoft, Meta Platforms, and Amazon are also set to announce earnings this week.

The US dollar index, which tracks the dollar's performance against a basket of six major currencies, rose towards 102.00 on Tuesday after a 0.5% loss on Monday.

As market uncertainty persists, the US dollar's performance is likely to remain a key indicator of investor sentiment in the coming weeks.

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