The dollar traded on the defensive on Wednesday as markets turned cautious ahead of the Federal Reserve’s first policy decision under newly appointed Chair Kevin Warsh, with investors weighing the next signal on US interest rates.
Currency markets were broadly rangebound, with the greenback easing slightly as optimism around an interim US-Iran peace agreement continued to support risk appetite and dampen demand for traditional safe-haven assets.
The Japanese yen remained under pressure, hovering near levels that keep traders on alert for possible intervention from authorities, after the Bank of Japan’s widely anticipated rate hike failed to provide meaningful direction for the currency.
Elsewhere, the euro held steady at around $1.1611 while sterling was little changed at $1.3430. The New Zealand dollar edged marginally higher to $0.5833.
Against a basket of major currencies, the dollar slipped to 99.53, reversing part of its earlier safe-haven gains following developments around the US-Iran ceasefire deal, which is expected to be formally detailed later this week.
Attention now turns to the Fed’s policy statement, economic projections and press conference, with markets widely expecting rates to remain unchanged at Warsh’s first meeting in charge. Traders will be closely watching for any shift in tone on inflation and the outlook for policy easing, particularly as expectations for rate cuts have been pared back in recent weeks.
Reuters
