Dollar Loses Steam Ahead of the Fed
The US dollar weakened slightly in trading on Tuesday (July 28th) ahead of the Federal Reserve's interest rate decision. The US Dollar Index fell around 0.1% and traded near 101.40.
The weakening occurred as investors reduced dollar positions ahead of the Fed's policy announcement on Wednesday. Weaker US consumer confidence data also limited demand for the currency.
The Fed is expected to keep interest rates in the 3.50%–3.75% range. However, the market still prices a nearly 40% chance that the central bank will raise rates by 25 basis points.
EUR/USD rose around 0.2% to near 1.1390, while GBP/USD edged higher to around 1.3290. Movement in both currencies remained limited as the market avoided large positions ahead of the Fed and Bank of England decisions.
USD/JPY rose toward 163.84 as high US bond yields continued to pressure the yen. The Japanese government remains wary of excessive volatility that could increase the risk of intervention.
Meanwhile, AUD/USD fell around 0.2% to 0.6975 ahead of Australian inflation data. The dollar's next direction will depend on the Fed's decision, Kevin Warsh's statement, and signals regarding the likelihood of a September interest rate hike. (arl)
Source: Newsmaker.id