The Fed is expected to keep rates virtually unchanged, ranging between 5.25% and 5.50%.
The dollar experiences a setback while awaiting the transcendental Federal Reserve decision in relation to the interest rates. This movement occurred in parallel with the fall of the pound sterling, influenced by speculation that the Bank of England (BoE) is close to ending its long series of interest rate increases.
The index dollar, which evaluates the performance of the US currency against a basket of six currencies, registered a decrease of 0.1%, standing at 105.00 units. Meanwhile, the pound showed marked volatilitywith a depreciation of 0.23% to $1.2364after reaching its lowest point in almost four months after it was revealed that British inflation had slowed more than expected in August.
Dollar in the world: waiting for the Fed’s resolution
Official data revealed a surprise decline in annual British consumer price inflation (CPI) to 6.7% in August, a day before the Bank of England’s monetary policy meeting, where a new increase in interest rates is expected.
Money markets have begun to value at almost 60% the possibility that the Bank of England will keep rates stable on Thursday, after having raised them on 14 consecutive occasions since December 2021. This change in perception occurred after, the Tuesday, the probability of a Bank of England pause was just 20%.
On the other hand, The Fed is expected to keep rates virtually unchanged, ranging between 5.25% and 5.50%, and the focus is on future signals and guidance provided by the central bank. Futures markets are pricing in a 30% chance of a quarter-point rise in November and a 35% chance in December, according to CME’s FedWatch tool.
As for other currencies, the yen stabilized at 147.87 units per dollar after hitting a 10-month low against the greenback of 148.17 yen before the Fed’s decision. Internationally, the yuan was unchanged at 7.3055 units per dollar after China met expectations market by keeping its benchmark interest rates unchanged on Wednesday. Meanwhile, the euro shows an increase of 0.24% to reach $1.0705.
Source: Ambito
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