US Dollar wobbles as investors remain wary ahead of Fed call
Frankfurt (Oct 28) The U.S. dollar struggled for direction on Wednesday, as investors held back from taking lopsided positions ahead of the Federal Open Market Committee’s decision in the U.S. later today.
Meanwhile, the Australian dollar fell sharply, as slow inflation data increased expectations for a rate cut in Australia as early as next week.
The ICE dollar index DXY, -0.16% was down 0.1% to 96,787, with the greenback trading mixed against other major currencies.
The dollar fell against the Japanese yen USDJPY, -0.08% to trade at ¥120.36, down from ¥120.47 late Tuesday in New York. The dollar was almost flat against the euro EURUSD, +0.1901% which fetched $1.1047 compared with $1.1049 on Tuesday. It was also almost unchanged against the pound GBPUSD, -0.0719% buying $1.5305 compared with $1.5300 late Tuesday.
The U.S. Federal Reserve wraps up its two-day policy meeting later Wednesday and investors sat on the sidelines. The U.S. central bank is widely expected to keep rates unchanged at near-zero levels. Fed officials have warned that a rate increase before the end of the year remains a viable policy option, but many investors believe the central bank will wait until 2016 to act.
“We can see investors are taking a wait-and-see mode ahead of the main events,” referring to the Fed decision and the Bank of Japan policy-setting meeting scheduled for Friday, said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley.
“Rather than trying hard to take new positions at times like this, investors are saving their energy until the main events,” said Ueno.
The Fed’s statement is due at 2 p.m. Eastern Time.
The Australian dollar AUDUSD, -0.8619% dropped as lower-than-expected inflation data helped increase the chances of a rate cut. Australian consumer prices rose 0.5% in the third quarter compared with an 0.7% increase expected by economists surveyed by The Wall Street Journal.
The Australian dollar tumbled against the U.S. dollar and the yen to 71.23 U.S. cents and ¥85.74, respectively, from 71.92 U.S. cents and ¥86.64 late Tuesday.
Source: MarketWatch
