NEW YORK :The U.S. dollar was firmer against major currencies on Wednesday as investors awaited the Federal Reserve’s monetary policy decision, as well as clues on the trajectory of interest rates this year.
The Fed is widely expected to hold interest rates steady at the end of its first policy meeting of the year on Wednesday. Fed Chair Jerome Powell is due to hold a press conference later. Markets fully price two 25-basis-point cuts from the Fed this year, but do not expect the first easing until June.
The dollar and other major currencies have come under pressure as investors weighed the impact of the anticipated tariff policies of U.S. President Donald Trump.
“What I’ve been telling clients is, ‘just look through the noise: we’re going to get duelling headlines, denials, etcetera, but the bottom line is that tariffs are coming and that’s at the margin dollar-positive,'” said Win Thin, global head of currency markets strategy at Brown Brothers Harriman & Co in New York.
The dollar strengthened 0.23 per cent to 0.906 against the Swiss franc. Against the Japanese yen, the dollar weakened 0.29 per cent to 155.07.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.03 per cent to 107.95.
The index touched a one-month low on Monday at 106.96 amid a global selloff in technology stocks and rush to safe-haven currencies such as the Japanese yen and Swiss franc, but the index is still up more than 4 per cent since the U.S. election in November.
“The fundamental driver that’s really been playing for the last year has been the policy divergence and U.S. economic outperformance. That’s been keeping the Fed on hold. And they expected to deliver a hawkish hold,” Thin added.
White House spokeswoman Karoline Leavitt said on Tuesday that Trump plans to make good on his promise to issue tariffs on Canada and Mexico on Saturday, but gave no details.
The Bank of Canada cut its key policy rate by 25 bps to 3 per cent on Wednesday, and warned Canadians that a tariff war triggered by the United States could cause major economic damage.
The Canadian dollar weakened 0.32 per cent versus the greenback to C$1.44 per dollar. The Mexican peso weakened 0.05 per cent versus the dollar at 20.579.
Bank lending to firms in the euro area picked up last month, indicating that rapid interest rate cuts have started to flow through to the real economy, European Central Bank data showed. The euro was down 0.07 per cent at $1.0421, while the Sterling weakened 0.04 per cent to $1.2438.
Bitcoin gained 1.73 per cent to $102,059.54. Ethereum rose 1.76 per cent to $3,106.53.
Currency bid prices at 29 January 4:07 p.m. GMT
Description RIC Last U.S. Close Previous Session Pct Change YTD Pct High Bid Low Bid
Dollar index 107.98 107.92 0.07 per cent -0.47 per cent 108.29 107.74
Euro/Dollar 1.0417 1.0431 -0.14 per cent 0.61 per cent $1.0444 $1.0383
Dollar/Yen 155.09 155.55 -0.36 per cent -1.5 per cent 155.685 154.995
Euro/Yen 161.55 162.19 -0.39 per cent -1.02 per cent 162.49 161.32
Dollar/Swiss 0.9068 0.9042 0.29 per cent -0.08 per cent 0.9082 0.9033
Sterling/Dollar 1.2429 1.2443 -0.09 per cent -0.61 per cent $1.2463 $1.2394
Dollar/Canadian 1.4444 1.4403 0.28 per cent 0.44 per cent 1.4471 1.4394
Aussie/Dollar 0.6224 0.6252 -0.4 per cent 0.63 per cent $0.6256 $0.6211
Euro/Swiss 0.9443 0.9429 0.15 per cent 0.53 per cent 0.9447 0.9423
Euro/Sterling 0.8376 0.8383 -0.08 per cent 1.25 per cent 0.8387 0.8365
NZ Dollar/Dollar 0.5651 0.5667 -0.24 per cent 1.03 per cent $0.5668 0.5635
Dollar/Norway 11.2959 11.2741 0.19 per cent -0.61 per cent 11.3473 11.2673
Euro/Norway 11.7669 11.7601 0.06 per cent -0.02 per cent 11.791 11.7524
Dollar/Sweden 10.9997 10.997 0.02 per cent -0.16 per cent 11.037 10.9762
Euro/Sweden 11.4585 11.4706 -0.11 per cent -0.07 per cent 11.4787 11.4456
