Dollar Up From 13-Month Low Ahead Of Fed Decision

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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.

FOMC Statement

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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Dollar Continues To Slump, Sinks To 10-Month Lows

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The U.S. dollar continues to slump as it sank to 10-month lows against the other major currencies on Tuesday, after an attempt to pass healthcare reform collapsed and amid a sell-off ignited by another setback to U.S. President Donald Trump’s agenda and doubts over prospects for another rate hike this year.

Greenback Sinks Against Major Currencies

The U.S. dollar index against a group of six major currencies was 0.64% lower at 94.31, the lowest trough since September 9, 2016.

The dollar was at almost three-week lows, weaker against the yen, with USD/JPY down 0.55% to 112.00, after falling as low as 111.99 overnight.

The euro rose to fresh 14-month highs against the dollar, with EUR/USD advancing 0.86% to 1.1577, after touching overnight highs of 1.1538.

Sterling was lower, with GBP/USD down 0.26% to 1.3022 after data showing that the annual rate of inflation in Britain fell for the first time since October last month.

Healthcare Issue and Rate Hike

The dollar came under renewed selling pressure after a second attempt by Republicans to replace Obamacare collapsed late Monday, bringing a major policy blow to the Trump administration.

Around half of the cuts in healthcare spending were reserved to finance proposed tax cuts. The failure to deliver healthcare reform added to disappointment over the lack of progress on Trump’s economic agenda.

The dollar was already on the defensive side after Friday’s weak U.S. inflation and retail sales data that  added to doubts that the Fed will be able to raise interest rates again this year.

Other Currencies

Elsewhere, the Australian dollar jumped to two-year highs, with AUD/USD,  adding 1.59% to trade at 0.7926, after the minutes from the central bank’s last policy meeting showed it turning more positive on the economic outlook.

The New Zealand dollar was also higher, with NZD/USD rising 0.61% to 0.7364. The kiwi initially turned lower overnight before regaining ground after weak inflation data indicated that the country’s central bank will keep interest rates on hold for longer.

The Canadian dollar hit fresh 14-month highs, with USD/CAD last at 1.2624.

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Can’t handle your funds properly? Exo Capital Markets will help you manage your funds. Exo Capital Markets strives to become the leading financial services firm by offering its clients with the most modern solutions in the industry.