Dollar Edges Lower; Fed Rate Decision Eyed
The dollar eased from three-week highs after economic data pointing to ongoing inflation weakness eased expectations of the Federal Reserve adopting a more aggressive stance on monetary policy next year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.20% to 93.87.
The Labor Department said on Wednesday its Consumer Price index rose 0.4% last month. In the twelve months through November, core-inflation, however, undershot expectations rising just 1.7%. The somewhat subdued consumer inflation report comes just hours ahead of the Federal Reserve monetary policy decision slated for 2.00 p.m. ET.
Bank of Tokyo Mitsubishi said it was “too late” – ahead of Federal Reserve monetary policy decision today – for Fed members to change their rate hike outlook for the next two years, but warned that ongoing sluggish inflation “could result in some of the five rate hikes” forecast for 2018 to 2019 could come "off the table" at the March 2018 FOMC meeting.
According to investing.com’s fed rate monitor tool, 100% of traders expect the Federal Reserve to raise rates on Wednesday for the third time this year.
Losses in the dollar were limited, however, as news emerged that lawmakers agreed a tentative tax deal, paving the way for a significant overhaul to the US tax system.