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Dollar little changed ahead of Fed decision

Daily Currency Update

The US dollar was little changed against a basket of currencies on Wednesday morning as investors waited for the US Federal Reserve's latest monetary policy update. After last week’s softer than expected CPI print, a robust US PPI print reignited inflation jitters, confirming expectations the Fed will announce an accelerated plan to monetary policy normalization. The central bank is set to make a statement at 2:30 p.m. eastern. Analysts see the announcement as key in guiding near and medium-term direction. Policymakers have adopted a more hawkish rhetoric in recent weeks, dropping key phrases and emphasizing the importance of controlling sustained price pressures. The market has high expectations for a definitive and perhaps aggressive policy shift and any sense the Fed has fallen short in meeting expectations could drive USD weakness, while a more aggressive plan could fuel further dollar gains.  The US Dollar Index was sitting at 96.58 at the time of writing.

Key Movers

GBPUSD climbed to a weekly high of 1.3265 on the back of data showing soaring inflation in the UK, but the pound lost momentum and retraced as investors waited for the Fed decision. GBPUSD sat around 1.3215 at the time of writing.  The UK Consumer Price Index (CPI) figures came in above expectations at 5.1% vs. an expected 4.8%. EURUSD was also lower as demand for the dollar was slightly up across the board, while the Canadian dollar was trading at around three-month lows against USD as well, partly thanks to a drop in oil prices.

Expected Ranges

  • EUR/USD: 1.1251 - 1.1275 ▼
  • GBP/USD: 1.3208 - 1.3276 ▼
  • AUD/USD: 0.7101 - 0.7149 ▲
  • USD/CAD: 1.2846 - 1.2919 ▲