Dollar Rangebound Ahead of Warsh’s First Fed Decision
The US dollar traded in a narrow range as investors awaited the Federal Reserve’s first policy decision under new Chair Kevin Warsh. The Bloomberg Dollar Spot Index was little changed after falling 0.2% over the previous two sessions, reflecting cautious positioning before the Fed provides clearer policy guidance.
The Fed is widely expected to keep interest rates unchanged on Wednesday. However, market attention is focused on whether the central bank will remove its easing bias from the policy statement, which could signal a more hawkish stance on the rate outlook.
Bloomberg Economics said a change in policy language could offer an important clue about the Fed’s direction. If the easing bias is removed, markets may interpret it as a sign that the central bank is not ready to open the door to rate cuts, especially while inflation remains sticky.
Oversea-Chinese Banking Corp. foreign-exchange strategists Moh Siong Sim and Christopher Wong said the case for sustained US dollar weakness remains weak. They expect Warsh to acknowledge sticky inflation and a firmer labor market, while avoiding a clear policy tilt.
The 10-year Treasury yield dipped one basis point to 4.43%. USD/JPY was little changed at 160.35 after Japan reported a narrower-than-expected trade deficit for May. The yen remained rangebound as traders waited for the Fed’s signals and the direction of global yields.
GBP/USD held steady at 1.3431 ahead of the UK’s May consumer inflation data. EUR/USD was also little changed at 1.1612, while markets watched the European Central Bank’s wage tracker for signs that higher inflation is feeding into wage growth.
AUD/USD was steady at 0.7069. Currency-market focus now turns to the Fed decision, the wording of the policy statement, Treasury yields, UK inflation data, and euro-area wage indicators. Until the Fed provides a clearer signal, the dollar is likely to remain rangebound against major currencies.
Source : Newsmaker.id
