Dollar steadies ahead of Fed meeting; trading ranges are limited
Investing.com — The U.S. dollar traded largely unchanged in early European trade Tuesday, drifting ahead of the start of the latest two-day Federal Reserve policy meeting, the highlight of several key central bank rate decisions this week.
At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded largely flat at 104.862, remaining close to last week’s six-month high.
Currency moves appear relatively subdued Tuesday, with traders seemingly unwilling to take further positions ahead of the result of this week’s U.S. Federal Reserve meeting.
The Fed officials get together later in the session, before announcing their decision on Wednesday. The policymakers are widely expected to keep interest rates on hold, but with inflation still elevated and economic data tending to show a resilient economy, they are also likely to maintain a hawkish stance.
“Here, our team sees a resolutely hawkish Federal Reserve, where despite unchanged rates the Fed, through its statement and dot plots, will hold out the possibility of one further hike to the 5.50-5.75% range later this year,” analysts at ING said, in a note.
The main economic data due Tuesday comes from the real estate sector, with housing starts for August expected to come in at an annualized 1.44 million, while building permits are also expected to be 1.44 million.
EUR/USD fell 0.1% to 1.0680, with the euro handing back some of the previous session’s gains after European Central Bank policymakers pushed back on the idea that a rate cut may soon be on the cards.
The ECB hinted that Thursday’s may have been its last for now, but policymakers will need until March to be sure and further rate hikes cannot yet be ruled out,
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