Investing.com – The U.S. dollar traded largely flat on Tuesday, with traders on edge ahead of the start of the Federal Reserve’s latest interest rate meeting.
At 05:10 ET (09:10 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading just higher at 104.342 and within a tight range.
Calm on the dollar ahead of Fed meeting
The ECB begins its two-day policy-setting meeting later Tuesday and is expected to leave rates unchanged when the meeting concludes the next day.
The US central bank is widely expected to leave interest rates unchanged this week, but traders will be watching for any hints from the Fed chairman at his press conference on how quickly policymakers are prepared to cut rates.
Soft inflation data and dovish comments from Fed officials have led markets to raise their expectations that September will be that starting point, with a 25 basis point cut.
Powell also has a meeting of central bankers in August, in the absence of a Fed meeting that month, to further steer the market, but failure to give a clear signal of a cut in September this week would likely lead to a rise of the interest rate on US government bonds. and the dollar.
Sterling is sliding due to uncertainty over the BOE
In Europe, it traded marginally lower at 1.2857 ahead of Thursday’s meeting.
There is a lot of uncertainty surrounding this meeting as key policymakers have not spoken publicly for more than two months due to rules in the run-up to the general election early this month.
Policymakers must weigh higher-than-expected service price inflation against weak growth and, if the assessment remains unchanged, appoint the marginal favorite in its current form.
rose 0.1% to 1.0829, following the release of some mixed eurozone growth data.
The economy grew slightly faster than expected in the second quarter, up 0.3% between the three months and the end of June.
However, this relatively good news was overshadowed by the unexpected contraction in the second quarter, which shrank by 0.1% in the second quarter compared to the previous three-month period.
The Yen gives back some gains
In Asia, it rose 0.5% to 154.78, with the yen giving up some of its recent gains ahead of Wednesday’s meeting.
Analysts appear divided over whether the central bank will leave interest rates unchanged or agree to a 10 to 15 basis point increase.
But beyond interest rates, the BOJ is widely expected to send aggressive signals by ending its quantitative easing policy. The central bank had said at its June meeting that it would outline plans to wind down its asset purchase programs in July.
fell 0.1% to 7.2496, remaining near an eight-month high, amid continued concerns over the country’s slowing economic growth.
