EUROPE MARKETS: Dollar Ticks Up As Investors Await Fed's Policy Signals
July 26 2017 - 9:34AM
Dow Jones News
By Carla Mozee, MarketWatch , Ryan Vlastelica
Traders will only have statement to read as Yellen isn't slated
to speak
The U.S. dollar edged slightly higher on Wednesday, with
investors largely expecting the Federal Reserve to say it remains
on course to raise interest rates again this year and offered
additional clarity on its intention to shrink its massive asset
portfolio.
The ICE U.S. Dollar Index , which tracks the greenback against a
half-dozen other major rivals, was up 0.1% at 94.17. The index
recently hit its lowest level on more than a year, and lost 1.4%
last week.
The euro bought $1.1628 ahead of the decision, compared with
$1.1649 late Tuesday in New York. The common currency has been on a
strong uptrend throughout 2017, having risen more than 10% against
the dollar thus far this year, nearing levels last seen in August
2015.
Against the yen , the dollar bought Yen111.88, compared with
Yen111.89 late Tuesday.
But appetite for risk showed up against Switzerland's currency ,
with the buck up roughly 0.7%.
Ahead of the Fed statement, the greenback bought 95.91 Swiss
francs, up from 95.25 Swiss francs late Tuesday. The Swiss currency
tends to act as a haven asset against the greenback, but the Swiss
National Bank lately hasn't struck the hawkish tones about policy
heard from other central banks including the European Central Bank.
The franc is up about 5.8% against the dollar this year.
The main focus of Wednesday's action, however, will be the
Federal Open Market Committee's policy decision, due at 2 p.m.
Eastern on Wednesday
(http://www.marketwatch.com/story/no-retreat-fed-to-stick-to-plans-for-rate-hike-balance-sheet-selloff-this-year-2017-07-24).
Fed Chairwoman Janet Yellen and her colleagues on the
policy-setting board are expected to signal they plan one more rate
increase in 2017--and that they anticipate starting to sell the
central bank's $4.5 trillion in holdings of Treasurys and
mortgage-related bonds this year.
Yellen isn't scheduled to hold a news conference after the Fed
releases its statement.
"No change is expected today given the tone of the recent
testimony by Fed Chief Janet Yellen on Capitol Hill and some of the
concerns that have been expressed by a number of policy makers
about the lack of inflation currently being seen in the U.S.
economy," Michael Hewson, CMC Markets' chief market analyst wrote
Wednesday.
"That being said given the U.S. dollar has slipped quite
sharply, a rate increase now would probably be a good time to slip
one in given recent declines," he said.
"That remains unlikely, but what is expected is for the Fed to
furnish a bit more detail on the timing on whether it will look to
start paring down the size of its balance sheet as we look towards
the September meeting, though given the lack of a press conference
this might be problematic in terms of communication," he added.
Matthew Weller, senior market analyst at Faraday Research, said
if the Fed either announces or implies an imminent reduction in its
balance sheet, the buck could rally toward its falling 50-day
moving average, referring to a closely watched chart level.
However, a well-established downtrend suggests investors favor
shorting into any near-term bounces in the dollar unless it is able
to break meaningfully back above the 50-day average, Weller
added.
More pairs: The pound fetched $1.3037, recovering from an
intraday low of $1.3000 after U.K. gross domestic product for the
second quarter expanded by 0.3%, meeting widely held expectations.
Sterling bought $1.3026 late in the previous session.
(END) Dow Jones Newswires
July 26, 2017 10:19 ET (14:19 GMT)
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