INTERNATIONAL CURRENCY BUZZ
Forex – Dollar Slips Lower Before Fed Rate Decision
Forex – Sterling Touches Day’s Lows after UK Inflation Data
Forex – EUR/USD climbs to session tops near 1.1780 ahead of FOMC
The dollar and the euro were little changed in rangebound trade on Wednesday as traders awaited a Federal Reserve policy announcement later in the day and looked ahead to Thursday’s European Central Bank meeting. The U.S. dollar index, which
measures the greenback’s strength against a basket of six major currencies, was trading at 93.88 by 03:46 AM ET (07:46 AM GMT), little changed for the day after rising 0.29%. The Fed is widely expected to raise interest rates for the second time this year
at the conclusion of its policy setting meeting later in the day. With a rate hike almost fully priced in, markets are focusing on whether the Fed will signal hiking rates four times this year, rather than the three times its indicated earlier in the year. The dollar
rose to fresh three week highs against the yen, with USD/JPY rising 0.21% to 110.59. The euro was almost unchanged against the dollar, with EUR/USD last at 1.1746.
The pound slid to the day’s lows on Wednesday after data showing thatUK inflation remained steady at a one-year low on May, despite pressure from higher oil prices. GBP/USD hit lows of 1.1312 after the release of the data and was trading at 1.3319 by 05:19 AM ET (09:19 AM GMT). The Office for National Statistics reported
that the annual rate of inflation rose by 2.4% in May, unchanged from the previous month, which was a one year low and in line with expectations. Rising motor fuel prices produced the largest upward contribution to inflation, the ONS said, reflecting increases in crude oil prices. Underlying inflation rose by 2.1% on a year-over-year
basis, matching the previous month and also in line with forecasts. Inflation remains below wage growth, even after data on Tuesday showing that wage growth slowed slightly in the three months to April. The steep drop in sterling in the wake of the June 2017 Brexit referendum drove up the cost of imports, leading to a spike in inflation.