Dollar Steady Ahead Of Fed Decision
The dollar was steady on Wednesday ahead of the U.S. Federal Reserve's policy decision, with investors nervously awaiting clues on how much interest rates will fall this year, while they generally expect the central bank to leave policy unchanged for now.
Expectations that trade policies under President Donald Trump could boost U.S. growth but also fuel inflation have led markets to bet on higher interest rates for the long term ahead of the inauguration, which has supported the dollar.
But with the tariff action investors had been anticipating yet to materialize, currency markets have been volatile since Trump took office and the dollar has weakened.
Markets on Wednesday turned their attention to the outcome of the Fed's first meeting of the year - less than a week after Trump said he wanted the central bank to cut interest rates.
The dollar index, which measures the greenback against a basket of other major currencies, rose 0.1% to 108.
The index hit a one-month low of 106.96 on Monday amid a selloff in global technology stocks and a rush to safe haven currencies such as the Japanese yen and Swiss franc, but it is still up more than 4% since the U.S. election in November.
Money markets expect the central bank to keep interest rates on hold, as Fed officials weigh how the Trump administration’s economic agenda could affect sluggish inflation and solid growth trends.
But investors will be watching for any hints from Fed Chairman Jerome Powell about whether a rate cut could be on the horizon if inflation eases closer to the Fed’s 2% annual target.
Source: Investing.com
