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Forex: Dollar Flat Ahead of Fed Decision

ForexDec 11, 2019 01:19PM ET
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© Reuters. – The U.S. dollar was flat on Wednesday, shrugging off data showing stronger-than-expected inflation as traders awaited a Federal Reserve interest-rate decision later today.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.02% to 97.39.

The Labor Department said on Wednesday its consumer price index rose 0.3%, above economists' forecasts for a 0.2% rise. That took the annual pace of inflation for the month to 2.1%, above estimates of 2%.

Analysts, however, are not convinced inflation is set to gather steam and remain adamant that the Fed will remain on the sidelines.

"With inflation trends still anchored around target, and interest rates already low, we look for the Fed to now remain on the sidelines through next year," RBC said.

The greenback has also been weighed down by ongoing uncertainty as to whether the U.S. and China will be able to avoid ramping up tariffs on each other as the Dec. 15 deadline is fast approaching.

The pound, meanwhile, came under pressure, before recovering somewhat after polls showed that the Labour Party had closed the gap on the ruling Conservatives ahead of the election on Thursday.

GBP/USD rose 0.13% to 1.3171.

USD/JPY fell 0.01% to Y108.69 and USD/CAD fell 0.31% to C$1.3184. The loonie was pressured by a fall in oil prices following and unexpected build in U.S. crude inventories.

EUR/USD was flat at $1.092 ahead of the European Central Bank monetary policy meeting on Thursday, with some on Wall Street saying recent easing measures from the central bank have been justified by weaker incoming data.

"The data is bad enough to fully justify the latest stimulus package and drown any question on a central bank overreaction in September, while not catastrophic enough to trigger uncomfortable queries about how the ECB could technically provide additional support to the economy," AXA IM says.

Forex: Dollar Flat Ahead of Fed Decision

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Comments (1)
Andrew carson
Andrew carson Dec 11, 2019 1:45PM ET
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The dollar that's too high, the hawkish Fed, and the no deal trade deal, is getting old...
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