Dollar Inches Higher Ahead of Fed Decision
The dollar rose modestly against its rivals amid mixed U.S. economic data on the labor market and manufacturing ahead of Federal Reserve's policy decision.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.15% to 94.47.
ISM manufacturing index showed a reading of 58.1 for July, missing expectations of 59.4. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy.
The ISM Employment sub-index showed a reading of 56.5 for July, topping expectations of 56.0, supporting the narrative of a strong U.S. labor market as the private sector also saw strong job growth.
Private payrolls grew by 219,000 for July, rising from the 181,000 seen in June, according to a report released Wednesday by ADP and Moody's Analytics. That beat economists’ forecast of 186,000.
The slew of economic data arrived just hours ahead of the Federal Reserve's interest rate decision and accompanying monetary policy statement due 2 p.m. ET.
The Federal Open Market Committee is expected to vote to leave interest rates unchanged, but market participants are expected to closely parse the accompanying statement for any tweaks in language on monetary policy.
According to Investing.com's Fed Rate Monitor Tool, 97.9% of traders expected the Federal Reserve to stand pat on interest rates. That is slightly higher than the 96.9% seen a day earlier.
The dollar lost ground against the yen as the latter drew strength from a sharp uptick in Japan 10-year bond yields in the wake of the Bank of Japan's decision Tuesday to permit long-term rates to fluctuate between zero and 0.2%, depending on economic and price developments.
USD/JPY fell 0.16% Y111.68 after trading as high as Y112.15
GBP/USD fell 0.05% to $1.3117 as traders looked ahead to the Bank of England's rate decision on Thursday.
The Bank of England's Monetary Policy Committee is widely expected to raise the 0.50% bank rate at Thursday's meeting to 0.75%.
EUR/USD fell 0.21% to $1.1668 while USD/CAD fell 0.02% to C$1.3004.