Forex

Dollar Down but Near One-Month High Ahead of Fed Policy Decision By Investing.com



© Reuters.

By Gina Lee

Investing.com – The dollar was down on Wednesday morning in Asia but remained near a one month high ahead of a highly anticipated .

The that tracks the greenback against a basket of other currencies inched down 0.04% to 90.468 by 13:11 AM ET (5:11 AM GMT).

The pair was steady at 110.06. The yen remained near a two-month low against the dollar touched earlier the month, with investors awaiting a on Friday.

for May disappointed, with growing 49.6% year-on-year and the contracting to JPY187.1 billion. However, grew a better-than-expected 27.9% year-on-year.

The pair edged up 0.15% to 0.7696 and the pair was up 0.32% to 0.7142.

The pair inched down 0.07% to 6.4008. Chinese economic data, including and the , is due later in the day.

The pair inched up 0.06% to 1.4089. The pound hit a one-month low of $1.4035 during the previous session despite the release of better-than-expected employment data, including April’s .

However, the rapid spread of the highly contagious Delta variant of COVID-19 that forced U.K. Prime Minister Boris Johnson to delay his plans to lift lockdown measures by three weeks, remains a big risk.

U.S. economic data released on Thursday said contracted a larger-than-expected 0.7% month-on-month in May. The producer price index growing a better-than-expected 0.8% and 6.6% respectively in May.

Meanwhile, industrial production for May grew a better-than-expected 0.8% but slowing down slightly to a 16.37% growth .

The Fed is widely expected to acknowledge the first conversations about when and how fast to begin asset tempering when it hands down its policy decision later in the day.

Some investors insisted the Fed would refrain from any hints of a start in assert tempering anytime soon.

“The Fed has said they’re going to be reactionary to the data… and they’ve said they want to see extended inflationary conditions before they make any commitment to tapering or hikes,” State Street (NYSE:) Bank Tokyo branch manager Bart Wakabayashi told Reuters.

However, the dollar could rally at any hint that the Fed will bring asset tapering forward or start discussing rate hikes sooner than expected. “I think they’ll stick to the same tagline, and it will probably end up being a non-event,” Wakabayashi added.

Other investors added that the dollar could rise by default as other major currencies seemed to be losing momentum.

“We have to note that the dollar is strengthening now even as U.S. debt yield has dropped below 1.5%… today’s currency market suggests there is strong potential pressure to lift the dollar, should there be some sort of surprises from the Fed,” SMBC Nikko Securities chief FX strategist Makoto Noji told Reuters.

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