Expectation for the rise in the interest rate impacts the dollar
The US dollar fell on Wednesday, while investors awaited the policy decision of the United States Federal Reserveamid speculation that it could signal a slowdown in future rate hikes.
The Central Bank (Fed) will publish its monetary policy statement and investors expect a rate hike of 75 basis points (bp), the fourth in a row.
But for the December meeting, the futures market is divided on the odds of a 75 or 50 basis point increase.
The dollar index, which measures the greenback’s performance against a six-currency basket that includes the yen, euro and sterling, fell 0.2% to 111.28 but was not far below the high. on Tuesday at 111.78, its strongest level since Oct. 25. Faced with the weakening of the dollar, the euro and the pound sterling rose to 0.9889 and 1.1494 dollars, respectively.
The Bank of England will announce its monetary policy decision on Thursday, with markets expecting a 75 basis point hike, followed by a 50 basis point rate cut in December.
The yen, which has fallen 28% against the US dollar this year, was outperforming as traders eyed possible intervention around the Federal Reserve meeting. The Japanese currency rose 0.8% to 147.07 per dollar.
The Brazilian real has also been closely watched after hitting a four-week high of 5.08 per dollar on Tuesday, after the government of President Jair Bolsonaro said it would begin the transition to the government of Luiz Inacio Lula da Silva. and allayed concerns about political instability.
Source: Ambito
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