Sat, May 27, 2023

Dollar holds as investors watch Fed policy meeting

U.S. dollar fell Tuesday. What about the Euro and Sterling?

On Wednesday, in Asia trading, the dollar maintained its current earnings. Investors are looking towards an important Fed policy meeting to see if it would support growing market anticipations for rate rises.

The dollar index was at 96.558, gaining 0.6% this week. It is testing last week’s 96.955.

The euro last traded at $1.1266, near its $1.1185 hit in the previous month, ranked its lowest in a year. The pound declined at $1.13327 as Britain grapples with increasing the new omicron strain cases.

The Fed meeting is scheduled later in the day, while this week is full of discussions in the central bank.

Currency strategist at CBA, Kim Mundy, said that the currency markets took a little break from the new omicron variant even though it was fading in the background. Mundy also said it’s challenging to be the dominant center of attention when the European Central Bank, the Bank of England, and FOMC prepare to make policy decisions.

Kim Mundy said that traders wait for the U.S. Federal Open Market Committee to understand two things: if they plan to accelerate tapering of their bond-buying program and if policymakers bring along their forecasts for interest rate upgrades.

Overview of the market

According to the poll conducted by Reuters, analysts reversed earlier anticipations that the Bank of England will increase rates this week because of the high spread of the new omicron cases in the U.K.

Markets expect the Fed to taper.

The yen eased slightly to 113.79 per dollar, keeping a weakening trend. The Australian dollar seemed to change slightly at $0.7109. The Canadian dollar remained weaker at 1.2855 per dollar.

Investors interested in investing in the Australian currency kept close attention on Chinese economic activity data, as China is considered the largest trading partner for Australia.

Bitcoin was at $48,600.

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