The US dollar pulled away from Tuesday’s lows in Asian trading on Wednesday as investors geared up for the Fed’s latest policy announcement later today. The greenback climbed to 113.69 yen in late session, having dipped as low as 112.62 yen yesterday on the back of weaker-than-expected retail sales figures.
The yen was under pressure on Wednesday, as earlier in the day Bank of Japan Governor Haruhiko Kuroda put the prospect of deeper rate cuts to negative territory back on the table after suggesting that a negative rate -0.5% is possible. The euro also gained against the Japanese currency, rising to 126 yen.
The pound was an exception and was not able to advance much against the yen as it was still reeling from a UK poll yesterday that showed supporters of a “Brexit” had a lead over voters who want the UK to remain in the EU. Sterling hit fresh intra-day lows against the euro and the dollar in late Asian session as today’s budget statement and tomorrow’s Bank of England meeting also weighed on the British currency. The pound was last trading around 1.41 dollars while the euro was up at 0.7862 versus the pound.
Crude oil prices moved away from yesterday’s near 2-week lows, helped by a smaller-than-expected rise in US crude stockpiles. US oil futures briefly rebounded just above $37 a barrel but eased to around $36.70 in late session.
Commodity currencies remained under pressure but the New Zealand dollar suffered heavier losses as a result of a drop in prices in the latest dairy auction. The kiwi hit a 2-week low of 0.6575 versus the US dollar on Wednesday before recovering back above 0.66 in late Asian trading. Better-than-expected fourth quarter trade data for New Zealand failed to provide much support for the kiwi.
Coming up later today, UK unemployment and earnings figures will be watched before the budget statement at 12:30 GMT. The UK Chancellor is expected to announce fresh spending cuts but will likely ease the pain by allocating fresh funds for education and infrastructure projects.
US inflation figures for February are also due later today along with housing data. But the main focus will be on the FOMC statement expected at 18:00 GMT and Janet Yellen’s press conference 30 minutes later, where she is likely to comment on the Fed’s latest economic projections and dot plot guidance.