The U.S. dollar is up from 13-month lows against the other major currencies on Wednesday as investors awaited the result of the Federal Reserve’s latest policy meeting and decision later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.09% at 94.00, moving away from Tuesday’s 13-month low of 93.46.
The Fed is widely expected to keep policy on hold, but Investors were hoping that the Fed’s rate statement, due later Wednesday, will reveal more about policy plans for the second half of the year, with markets paying close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet.
Doubts over the Feds plans for a third rate hike this year have recently weighed on the greenback.
Markets have reduced expectations for a U.S. interest rate increase in the coming months with expectations of another rate hike at less than 50 percent before the end of the year.
“If there is no change in the language of the statement, we can expect a mild dollar rally and there would be a better opportunity for the Fed to communicate its policy expectations at Jackson Hole next month,” said Ulrich Leuchtmann, a currency strategist.
Investors also stayed focused on the investigation into alleged links between U.S. President Donald Trump’s administration and Russia in last year’s election.
On Monday, Jared Kushner, Trump’s son-in-law and a senior White House adviser, told Senate investigators he had met with Russian officials four times last year but said he did not collude with Moscow.
Investors fear the persistent political turmoil will disrupt the Trump administration’s pro-growth economic agenda of tax cuts and infrastructure spending, which helped propel the dollar to 14-year peaks after the November election.
Dollar Against Other Currencies
Euro against the dollar was little changed at 1.1627, off session lows of 1.1613, while the sterling edged up against the greenback 0.09% to 1.3040, erasing earlier losses, after the U.K. Office for National Statistics said gross domestic product rose by 0.3% in the three months to June, from 0.2% growth in the first three months of the year, wherein economists had forecast growth of 0.3%.
On a year-over-year basis the economy expanded by 1.7% from 2.0% in the first quarter, also in line with forecasts.
Moreover, the dollar was little changed against the safe-haven yen at 111.91, while it climbed against the swiss franc 0.60% to trade at 0.9581.Lastly, the Australian dollar remained weak, with the Aussie dollar down 0.23% at 0.7919, while the New Zealand dollar or kiwi added 0.18% to 0.7431.
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