Dollar Rises Before Fed, Pound Lower After UK CPI
The dollar traded mixed versus its Group-of-10 peers ahead of the Federal Reserve policy decision, while sterling pared recent gains after UK CPI was released.
The Bloomberg Dollar Spot Index is up by as much as 0.1%; traders expect the FOMC to cut interest rates by 25 basis points and to sound cautious on future easing steps.
One-day volatility in BBDXY rises above 13.50% as options also capture meetings by the Bank of England, the Bank of Japan, Norges Bank and Riksbank on Thursday.
GBP/USD drops 0.2% to 1.2680, stays close to its 21-DMA; cable briefly rose after data showed that UK inflation rose to an eight-month high in November, for the move to quickly lose traction.
Money markets are pricing around 60 basis points of easing through end-2025 by the BOE, which is up from around 56 basis points on Tuesday but remains lower than the over 70 basis points seen on Monday.
USD/JPY up 0.2% to 153.79, after falling 0.5% on Tuesday; recent views from BOJ officials suggest they lean toward a hold.
EUR/USD stays within tight range, is modestly higher on the day at 1.0497.
AUD/USD is down 0.4% to 0.6309, lowest since Oct. 2023; leveraged momentum and CTA funds increase bearish positioning ahead of the Fed rate decision, according to Asia-based FX traders.
Australia’s budget is expected to slip deeper into deficit in the years ahead due to rising government spending and a weakening in key trade partner China, a mid-year fiscal update showed, with a national election due in less than six months.
Source : Bloomberg
