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U.S. Dollar Slips as Traders Wait for Fed’s 2019 Rate Outlook

12/19/2018, 3:16:47 PMBasics of Trading
U.S. Dollar Slips as Traders Wait for Fed’s 2019 Rate Outlook

The U.S. dollar slipped on Wednesday in Asia as the Federal Reserve got its two-day meeting underway.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies fell by 0.2% to 96.343 by 12:01 AM ET (05:01 GMT).

"The positioning going into the FOMC meeting is very defensive and that's why we are seeing the dollar weakening," said Michael McCarthy, chief markets strategist at CMC Markets.

The Fed is likely to raise rates later in the day, but some expect the central bank to signal fewer rate hikes for 2019.

Nomura forecasts the dot plots, a chart of future interest rate expectations by Fed members, to show only two hikes are appropriate for 2019, below the central bank's previous guidance of three hikes.

The USD/CNY pair slipped 0.1% to 6.8910 as the People's Bank of China (PBOC) set the yuan reference rate at 6.8869 vs Tuesday's fix of 6.8854.

The USD/JPY pair fell 0.2% to 112.29. Japanese stocks underperformed their regional peers after SoftBank Corp sank as much as 12% in a disappointing debut on the Tokyo stock market.

The company raised 2.65 trillion yen ($23.5 billion) from the IPO, making it Japan's biggest IPO and just below Alibaba (NYSE:BABA)'s record $25 billion listing in 2014, according to Reuters.

Elsewhere, the AUD/USD pair and the NZD/USD pair both gained 0.2%.