By Peter Nurse
Investing.com – The dollar edged higher in early European trade Wednesday, but moves have been capped ahead of the conclusion of the crucial Federal Reserve meeting later in the session.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 93.255, just off Tuesday’s high of 93.455, the strongest level since Aug. 23.
rose 0.3% to 109.54 after the kept its negative interest rate and asset-buying targets unchanged earlier Wednesday, as largely expected, while flagging Covid-linked pressures on the economy.
edged lower 0.1% to 1.1721, fell 0.1% to 1.3651, while the risk sensitive rose 0.2% to 0.7252, rebounding from a three-week low, helped by an improvement in risk sentiment after China Evergrande Group (HK:) pledged to pay the scheduled coupon on a yuan bond that is due on Thursday.
The highlight Wednesday is the conclusion of the latest , with traders looking to see if the central bank signals the scaling back of asset purchases later this year.
“Markets may be more sensitive to any signals about the timing of monetary tightening as the Dot Plot projections are released along with other economic forecasts,” said analysts at ING, in a note. “It is quite a close call, but we do not expect the Median Dot Plot for the first rate hike to shift from 2023 to 2022.”
The central bank will release a statement at 2 PM ET (1800 GMT), plus updated quarterly estimates, including its dot plot of rate projections, to be followed 30 minutes later by a press conference from Chair Jerome Powell.
Meanwhile, rose 0.1% to 300.88 and climbed 0.1% to 352.70 after the Hungarian central bank increased its benchmark rate by just 15 basis points to 1.65% on Tuesday, halving the 30 bps hikes it has undertaken in each of the past three months.
The central bank is trying to balance surging inflation with the fallout from the latest wave of the global pandemic.
traded 0.1% higher at 6.4686, with the yuan weakening after the northeastern city of Harbin went into semi-shutdown after reporting new locally transmitted COVID-19 cases for the first time since early February. That outweighed any short-term relief at the news from Evergrande.
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