He global dollar rose on Wednesday as investors made last-minute adjustments to their portfolios in the countdown to the last wave of central bank meetings of the year, with the meeting of the United States Federal Reserve (Fed) this Wednesday as a main course.
He dollar index was trading at multi-month and even multi-year highs against a variety of currencies, including the Australian, New Zealand and Canadian dollars, ahead of the Federal Reserve’s interest rate decision later in the day, Reuters reported. .
The Fed is expected to cut rates by a quarter point but signal a cautious approach to easing monetary policy next year, coinciding with the inauguration of donald trump in the American presidency.
Traders are almost certain that the Fed will move the funds rate window 25 basis points lower (from its current range of 4.5-4.75%) but will raise its long-term interest rate projections.
“Markets will focus on two things. The key message has already been conveyed: there will undoubtedly be a cut, but it will be an ‘aggressive cut’, in the sense that a slower pace of cutting will be communicated and guided to a rate highest terminal,” said Samy Chaar, an economist at Lombard Odier in Geneva.
The dollar index is up 1.13% against a basket of six other currencies this month. December is usually the weakest month of the year in terms of returns for the US currency, as investors tend to liquidate their positions. This year, it has had the best performance for a December since 2014.
A hawkish Fed could cause the dollar to extend this rally. “We see risks of strength of the dollar as expectations for a cut in March could decline further after the announcements,” strategists at MUFG in a note.
He euro remained practically stable during the day at $1.0494, while the yen weakened, leaving the dollar up 0.16% at 153.71.
The pound sterling fell after data showed British consumer inflation rose slightly more than expected in November. He Bank of England It meets on Thursday and is not expected to make any changes to monetary policy. Markets expect cuts of around two quarters of a point next year.
Source: Ambito
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