Aussie Ticks Higher Ahead Of Central Bank Minutes
The Aussie ticked higher in early Asia on Tuesday ahead of central bank minutes with investors also focused on the start of a two-day Fed meeting in the U.S.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted up 0.17% to 91.81.
Overnight, the dollar rose against a basket of major currencies on Monday, following strong gains in U.S. treasury yields amid rising expectations that the Federal Reserve will reaffirm its plan to hike rates at least once this year when it concludes its two-day policy meeting which gets underway on Tuesday.
In what was a slow day on the economic calendar for top-tier data, investors turned attention to the two-day Federal Reserve Open Market Committee (FOMC) meeting for fresh insight into the central bank’s thinking on monetary policy.
U.S. treasury yields jumped, underpinning a move higher in the greenback, as investors expect the central bank to announce that it will begin unwinding its $4.5 trillion bond portfolio and reaffirm its outlook that an additional rate hike this year remains appropriate.
As well as plans for balance sheet unwinding, the Fed’s Summary of Economic Projections and dot-plot are expected garner much of the attention, as investors are keen to assess whether the slowing pace of inflation has altered the central bank’s longer-term view on interest rates.
“Away from the balance sheet, investors should focus on the Summary of Economic Projections and the well known dot-plot.” Analysts at Morgan Stanley (NYSE:NYSE:MS) said in a note. “We see the biggest risk to our economist's call for status quo as a lower median longer run dot - possibly falling to 2.75% from 3.00%.”