Dollar near two-week high as Fed decision looms; Aussie falls
By Kevin Buckland
TOKYO (Reuters) — The dollar hovered close to a two-week high versus the euro on Wednesday, while the yen consolidated near the middle of its range this month as traders awaited crucial policy decisions from the nations' central banks this week. The Australian dollar slid after benign inflation data suggested the Reserve Bank of Australia would forgo a rate hike next week.
The U.S. dollar index — which measures the currency against six major peers, but is heavily weighted toward the euro — edged 0.06% higher to 101.37 in the Asian morning, after pushing as high as 101.65 overnight for the first time since July 11.
The euro slipped 0.16% to $1.1042, bringing it close to the previous session's low of $1.1036, a level last seen on July 12.
Continued signs of a resilient U.S. economy in the face of the Federal Open Market Committee's (FOMC) steep series of interest rate increases has helped buoy the dollar index from a 15-month trough of 99.549 reached a week ago.
In the latest data, U.S. consumer confidence increased to a two-year high in July amid a persistently tight labor market and receding inflation.
Money market traders see a quarter point hike from the U.S. Federal Reserve on Wednesday as a near certainty, but are split on the odds of another later in the year, putting it at more or less a coin toss.
Meanwhile, the European Central Bank sets policy on Thursday. Again, a quarter point hike is widely expected, but building evidence of an economic slowdown has called into question the chances of another by year end.
«Given the deceleration in underlying inflation, we think the risk is (Fed Chair Jerome) Powell cools on another hike by describing the FOMC as 'data dependent,'» which would pressure the
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