Dollar Edges Ahead of Reserve Statement

FxPremiere.com – FX Signals – The US dollar edged higher in early European trading Wednesday, but remained below recent highs amid caution ahead of the U.S. Federal Reserve’s latest policy decision.

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At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 92.493, having earlier retreated from last week’s 3 1/2-month high of 93.194.

Dollar Edges Higher Overall

USD/JPY rose 0.1% to 109.87, GBP/USD was largely unchanged at 1.3876, EUR/USD edged lower to 1.1810, while the risk-sensitive AUD/USD was flat at 0.7360.

Elsewhere, USD/CNY edged 0.1% lower to 6.5036, with the yuan slightly rebounding after recording its worst day since October on Tuesday as a result of the turmoil in local equity markets.

Dollar Edges Lower Ahead

The main focus Wednesday will be on the conclusion of the two-day meeting of the U.S. Federal Reserve. The central bank’s unexpected hawkish turn at its previous meeting in June led to a month-long rally for the dollar, but traders are not expecting any significant changes in today’s statement, even with discussions underway over the timing of the exit from its bond-buying program.

US Dollar Up, Major Currencies on Hold

“From the threat of the highly contagious Delta virus variant, expiring eviction moratorium and extra unemployment benefits, there are just too many uncertainties for the Fed to press the pedal on taper,” said Kathy Lien, an analyst at BK Asset Management. FX Signal

The U.S. Centers for Disease Control and Prevention recommended Tuesday that fully vaccinated people begin wearing masks indoors again in areas where cases are surging, a reflection of the growing risks.

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However, if “one of two five-letter words (Delta or Taper) make their way into the FOMC statement, we will see a big reaction in the U.S. dollar,” added Lien. “If the Fed includes concerns about the Delta variant, the U.S. dollar could extend its slide quickly. If it shrugs off those worries and officially acknowledge that taper is coming, the U.S. dollar will soar.”

Dollar Weakens Ahead of Stimulus Talks Federal Reserve

The 30 basis point hike to 1.20% was Hungary’s second in as many months.

Dollar Edges Ahead of Reserve Statement

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