Dollar holds gains in Asia as Fed view on rates awaited
The dollar held overnight gains into Asia on Wednesday with the Fed expected to announce its views on rates
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.11% to 93.92.
The Federal Reserve Open Market Committee (FOMC) got its two-day policy meeting underway on Tuesday amid expectations the central bank will leave interest rates unchanged.
Investors, however, will parse the policy statement on Wednesday for fresh insight into the central bank’s thinking on monetary tightening.
Following its decision to raise rates in June for the second time this year, the Fed said that the slowdown in inflation was transitory and signaled its intention to raise rates at least once more this year.
In New Zealand, the trade balance for June widened to a deficit of NZ$3.66 billion, compared to NZ$3.7 billion seen on year. NZD/USD traded at 0.7421, up 0.05%, while AUD/USD traded at 0.7935, down 0.01%. USD/JPY changed hands at 111.96, up 0.07%.
Overnight, the dollar traded flat against a basket of global currencies on Tuesday, as the Fed’s two-day rate policy meeting overshadowed economic data showing an improvement in consumer optimism about the strength of the U.S. economy.
The dollar eased from highs, as investors looked ahead to the Federal Reserve’s rate decision due Wednesday, expected to provide fresh insight into the U.S. central bank’s thinking on monetary tightening.
Analysts expect the Federal Reserve to keep its benchmark rate unchanged on Wednesday.
Ahead of the Fed rate decision, the dollar struggled to capitalize on better-than-expected consumer confidence data for July, easing fears about a possible slowdown in the U.S. economy.
The Consumer Confidence Index rose in July to 121.1 to a 16-year high, despite expectations for a drop, The Conference Board announced Tuesday.
Economists had forecast the major indicator of consumer optimism to decline to 116.5 in July.
Meanwhile, GBP/USD eased after rallying to session highs of $1.3084 on the back of a tweet from President Donald Trump outlining that his administration is working on “major trade deal” with the United Kingdom.
A speech by Bank of England MPC member Andy Haldane later during the session is expected to provide further insight on whether the central bank continues to support the idea of tapering its ultra-accommodative monetary policy measures later this year