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U.S. Dollar Inches Down Ahead of Fed; Yuan in Focus as Trade Talks Begin

1/30/2019, 5:58:13 PMMarket Analysis
U.S. Dollar Inches Down Ahead of Fed; Yuan in Focus as Trade Talks Begin

The U.S. dollar edged down on Wednesday in Asia as investors await the Federal Reserve's interest rate decision due later in the day.

The central bank is expected to leave its key federal fund's rate target unchanged at 2.25% to 2.5%. On Tuesday, the Conference Board, a business research group, said the U.S. consumer confidence index dropped to 120.2 in January, an 18-month low, from 126.6 last month. The reading was below economists' forecast for a reading of 124.7.

The U.S. dollar index that tracks the greenback against a basket of other currencies last traded at 95.450 by 11:09 PM ET (04:09 GMT), down 0.1%.

Meanwhile, the USD/CNY pair fell 0.2% to 6.7139 as China's Vice Premier Liu He is set to begin trade talks with U.S. officials, including President Donald Trump, in Washington today.

The People's Bank of China (PBOC) set the yuan reference rate 6.7343 on Wednesday vs the previous day's fix of 6.7356.

The AUD/USD firmed 0.6% to 0.7195 after quarterly inflation data showed a slight acceleration.

The Reserve Bank of Australia (RBA) is due to meet next Tuesday. The central bank had kept interest rates at a record low of 1.50% for the past 26 meetings. Yesterday, RBA board member Ian Harper said the next move in rates was “likely to be higher”

Elsewhere, the GBP/USD pair gained 0.2% to 1.3092. U.K. lawmakers on Tuesday rejected an amendment to extend the deadline for Britain to leave the European Union.

Labour MP Yvette Cooper's amendment, which sought to extend Article 50 if MPs fail to approve the Withdrawal Agreement by Feb. 26, was voted down. Without an option to extend the deadline beyond March 29, there's a risk the U.K. could crash out of the EU without a deal.