USD stable as rate increase expected
Wednesday 3 May, 2023
Daily Currency UpdateThe US dollar has found some support, with traders expecting an interest rate increase later today, but unsure how long the Federal Reserve will keep policy tight considering the latest poor jobs data, concerns about the US debt ceiling and the banking contagion crisis.
The Federal Reserve is widely expected to raise interest rates by 25 basis points when it concludes a two-day meeting on Wednesday and investor focus will be on whether the Fed hints at a pause or further tightening.
Key MoversData released on Tuesday showed the eurozone inflation accelerated but price growth eased unexpectedly, adding to discussions or debates for a lesser interest rate increase from the ECB tomorrow.
Traders believe there is roughly an 85% chance of a 25-basis point ECB hike on Thursday's meeting and a 15% chance of a 50 basis point increase.
- GBP/USD: 1.2485 - 1.2575 ▲
- GBP/EUR: 1.1305 - 1.1385 ▲
- EUR/USD: 1.1005 - 1.1085 ▲