Get 40% Off
🎁 Free Gift Friday: Copy Legendary Investors' Portfolios in One ClickCopy for Free

Forex - Dollar Remains Lower Before Fed Decision

Published 01/31/2018, 10:30 AM
© Reuters.  Dollar remains lower before Fed decision

Investing.com - The dollar remained weaker on Wednesday, losing ground against a basket of the other major currencies ahead of the Federal Reserve’s policy decision later in the day.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.39% to 88.68 by 10:29 AM ET (15:29 GMT), not far from last week’s low of 88.25, its weakest level since December 2014.

The dollar was on track for a steep monthly loss against its peers, with the index down around 3.0% on the month at time of writing.

The dollar has come under pressure as it has lost its relative yield attraction for investors. A faster rate of monetary tightening outside the U.S. would lessen the divergence between the Federal Reserve and other central banks.

The dollar showed limited reaction to U.S. President Donald Trump's State of the Union speech, in which he urged Congress to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending.

Investors remained cautious ahead of a slate of events this week, including the Fed’s two-day policy meeting that ends later on Wednesday and Friday’s U.S. employment report for January.

While the Fed was not expected to make any changes to monetary policy, the meeting was the last time Janet Yellen would serve as Fed chair before the role is taken over by Jerome Powell.

The dollar shrugged off data showing that the U.S. private sector added 234,000 jobs in January, pointing to sustained strength in the labor market. Another report showed that labor costs rose solidly in the fourth quarter.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Separate reports showed that U.S. pending home sales rose for a third consecutive month in December, while manufacturing activity in the Chicago region cooled in January, albeit at a slower than expected pace.

The euro was up almost half a cent, with EUR/USD rising 0.48% to 1.2461, moving back in the direction of the more than three year peaks of 1.2537 reached last week.

Demand for the euro continued to be underpinned after euro zone inflation data for January underlined expectations that the European Central Bank will soon begin to scale back its monetary stimulus measures.

The single currency has risen around 3.5% against the dollar so far in January.

The dollar was a touch higher against the yen, with USD/JPY edging up 0.12% to 108.90, holding above last Friday’s four-and-a-half month low of 108.27.

Sterling pushed higher, with GBP/USD rising 0.28% to 1.4185.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.