Dollar Slips From One-Month High Ahead of Fed Statement
By Administrator_ India
The dollar edged marginally lower in early European trade Wednesday but remained near a one-month high as traders warily await the latest communications from the Federal Reserve following the recent jump in U.S. inflation.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was less than 0.1% lower at 90.468, having hit a one-month high of 90.677 on Tuesday.
USD/JPY was largely unchanged at 110.06, near its two-month high of 110.325 touched earlier this month, GBP/USD was up 0.1% at 1.4087, above Tuesday’s one-month low of 1.4035, and EUR/USD was marginally higher at 1.2128. The risk-sensitive AUD/USD was up 0.2% at 0.7698.
The U.S. Federal Reserve concludes its latest two-day policy meeting later Wednesday. Although the two-day meeting is expected to culminate in an unchanged decision on interest rates and monthly bond purchases, the backdrop of sharply rising inflation as the country’s economy makes a solid recovery appears to be keeping traders on edge.
Further evidence of these inflationary pressures, and thus raised fears of a hawkish surprise, emerged Tuesday, with data showing wholesale inflation jumped to record levels, just a week after consumer prices rose to their highest level since 2008.
Balancing this out, to a degree, May’s retail sales data came in weaker than expected on Tuesday, pointing to softer consumer spending, the backbone of the economy, even if April’s release was revised higher.
Still, even if there are some concerns over the Fed turning hawkish, the moves in the foreign exchange market have been limited of late, suggesting many still have faith in the Fed’s commitment to providing clear signaling before making a move on monetary policy.