© Reuters.
Investing.com – The US dollar fell in early European trade on Wednesday, struggling for momentum ahead of the conclusion of the latest Fed policy meeting.
At 02:55 ET (06:55 GMT), the greenback, which measures the greenback against a basket of six other currencies, was trading down 0.1% to 102.898, near its lowest level in three weeks.
The Fed’s decision looms large
The dollar fell sharply on Tuesday and struggled to find friends during the current session after weak US inflation data largely reinforced the view that the dollar will decide to keep interest rates unchanged later in the day when the two-day policy-setting meeting wraps up.
The US rose just 0.1% last month, which is 4.0%, the smallest increase since March 2021.
With the pause now largely factored in, uncertainty hangs largely over what language Fed officials will use to guide future moves, namely whether the central bank will want to reinforce the notion that the tightening cycle is far from over.
“We expect the Fed to offer a hawkish pause tomorrow and highlight the possibility of following a similar path for the RBA and the Bank of Canada, which both rose after pauses,” analysts at Goldman Sachs said in a note. Posted Tuesday.
The UK economy grows in April
It fell to 1.2608 after rising 0.8% in the previous session and reached the highest level since May 11th.
Data released on Wednesday showed that the UK grew 0.2% month over month in April, as expected, but manufacturing and construction contracted.
However, the pound sterling was still supported by strong wage growth on Tuesday, which boosted the possibility of continued tightening into next week.
The date of the release of industrial production data in the eurozone
It fell 0.1% to 1.0787 before the release of Eurozone data for April, which is expected to show a recovery from the sharp drop in the previous month.
This comes a day before the last meeting, and an increase of a quarter point is widely expected to be announced.
There will likely be more Chinese stimulus
It fell to 7.1657, with the yuan staying near a six-month low after the central bank cut interest rates on Tuesday, leading to speculation that more stimulus is on the way as Beijing looks to shore up the country’s faltering post-COVID economic recovery.
Elsewhere, it fell 0.1% to 140.13 ahead of Friday’s meeting, which is expected to result in the central bank maintaining its ultra-easy policy settings.
