CURRENCIES: U.S. Dollar Struggles For Direction Ahead Of Fed Rate Hike
September 25 2018 - 6:42AM
Dow Jones News
By Anneken Tappe
Euro firms but off session's highest levels as ECB's Draghi
comments downplayed
Major currencies were muted on Tuesday as traders were awaiting
the Federal Reserve interest rate decision on Wednesday, the major
event of the week.
The U.S. dollar was struggling for direction, trading mostly
sideways, as the Fed's two-day monetary policy meeting was about to
get under way. Investors are expecting a 25-basis-point interest
rate increase Wednesday afternoon. Fed funds futures, which reflect
trader bets on central bank action, point at a 93.8% likelihood for
a quarter-point increase.
The ICE U.S. Dollar Index was last little changed at 94.192.
Don't miss:Why a Fed rate hike is unlikely to reignite the
dollar rally
(http://www.marketwatch.com/story/why-a-fed-rate-hike-is-unlikely-to-reignite-the-dollar-rally-2018-09-24)
Meanwhile in Europe, Italy will present a budget including a
deficit of 1.9% of GDP for 2019, according to reports. This week's
budget proposal is seen as a risk event for the euro
(http://www.marketwatch.com/story/what-the-market-will-watch-for-in-italys-crucial-budget-proposal-in-the-coming-week-2018-09-21).
It has lead to in-fighting in Italy's governing coalition, while
market participants also worry whether the coalition would comply
with European Union budget guidelines.
The euro was somewhat stronger on Tuesday, buying $1.1761 versus
$1.1749 late Monday.
Earlier, the shared eurozone currency was knocked off its
$1.1775 session high after European Central Bank chief economist
Peter Praet labeled Monday's comments from ECB President Mario
Draghi as nothing new. Draghi Monday said that he expected
underlying eurozone inflation to strengthen
(http://www.marketwatch.com/story/ecb-president-mario-draghi-expects-vigorous-pick-up-in-underlying-inflation-2018-09-24),
leading the euro to jump.
On the trade front, renegotiations for the North American Free
Trade Agreement are expected to resume this week, ahead of the Sep.
30 deadline. Mexico and the U.S. already agreed to a deal, but
Canada is still left out. Market participants named drug patent
protection is the latest issue risking a stalemate between
negotiating parties.
One U.S. dollar last bought C$1.2958 , little changed from
Monday.
The U.S.-Mexican peso pair was also little changed at
18.9660.
(END) Dow Jones Newswires
September 25, 2018 07:27 ET (11:27 GMT)
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