By Chibuike Oguh and Stefano Rebaudo
NEW YORK (Reuters) – The U.S. dollar advanced against its peers on Wednesday ahead of the Federal Reserve’s monetary policy decision later in the session, with markets expecting the central bank to cut rates for a third straight time.
The Fed is likely to cut its policy rate by 25 basis points to the range of 4.25% to 4.50% and officials are also expected to signal a pause in rate cuts next year. According to the CME’s FedWatch tool, the futures market currently implies a nearly 97% chance of a discount.
The Fed will release its policy statement and updated economic projections at 2 p.m. EST (7 p.m. GMT), while Chairman Jerome Powell will hold a news conference half an hour later.
“My own feeling would be that I would expect the Fed to make an aggressive rate cut, meaning they cut rates, but the dot chart shows less cuts than they said in September,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
“Powell will also repeat what he said earlier that the economy will be stronger than expected, but he will temper the idea. So from the dot chart and its word choices, I think the market is inferring that the Fed won’t be as aggressive. next year as they expected.”
The dollar strengthened 0.04% to 0.89285 against the Swiss franc in choppy trading. The euro fell 0.16% to $1.0474.
The , which measures the dollar against six rivals, rose 0.19% to 107.13 after hovering around a three-week high.
The dollar strengthened 0.39% to 154.055 against the Japanese yen, with markets cutting bets that the Bank of Japan will raise rates on Thursday in favor of a January rate hike, following media reports.
The Bank of England is also expected to keep interest rates steady on Thursday. Pound sterling edged higher against the euro but fell against the dollar as investors watched the Fed’s policy meeting and after UK inflation figures were in line with expectations. The currency weakened 0.1% to $1.2699.
Sweden’s Riksbank is widely expected to cut rates by as much as half a point, while Norges Bank will leave rates unchanged. The Norwegian krone fell 0.43% to $11.2422, while the Swedish krone weakened 0.12% against the dollar to 10.9705.
Gloomy expectations for Chinese economic growth sent New Zealand’s and New Zealand’s down. China is Australia’s largest two-way trading partner.
The Australian dollar fell to $0.63055, its lowest level since October 2023. It was last down 0.35% at $0.6314. The kiwi hit a new two-year low at $0.57205.
It traded at 7.296 per dollar on Tuesday, holding steady near a 13-month low against the dollar.
retreated from recent highs. The world’s largest cryptocurrency fell 2.06% to $104,227.
