USD edges lower ahead of Fed statement
Daily Currency Update
USD - United States Dollar
Demand for the US dollar slipped ahead of the US Federal Reserve’s monetary policy statement today, and as market concerns eased as one of China’s biggest property developers, Evergrande, reached a debt deal. The US Dollar Index was trading at 93.13 at the time of writing.
Market focus is on the Fed’s monetary policy statement at 2 p.m. eastern. While we don’t expect the central bank to give guidance on when they will scale back emergency stimulus, we will be paying attention to the Fed’s updated projections. Previous forecast saw a number of members bring forward their expectations for interest rate hikes into 2022 and a further move in the median forecast could drive USD support through the near term.
Key Movers
The euro edged slightly higher against USD as market sentiment improved a little over Evergrande’s debt deal. Eurozone consumer confidence also beat expectations in September as some travel restrictions were eased and the spread of the COVID-19 Delta variant started showing signs of being brought under control. EURUSD was up 0.11%, trading around 1.17355.GBPUSD was little changed this morning, trading around 1.3662 at the time of writing. The pound declined yesterday against the US dollar and the euro in part due to concerns over rising UK energy prices. A less stable economic outlook for the UK can cause investor risk sentiment to weaken. The Bank of England meets tomorrow but changes to their monetary policy and interest rates are not expected by the market.
Oil prices and an improved mood by market participants helped buoy the Canadian dollar on Wednesday. The Canadian dollar rallied on Tuesday after Canadians re-elected Prime Minister Justin Trudeau, signalling a clearer path for more economic support. USDCAD was down 0.61%, trading around 1.2734 at the time of writing.
Expected Ranges
- EUR/USD: 1.1718 - 1.1742 ▲
- GBP/USD: 1.3619 - 1.3677 ▼
- AUD/USD: 0.7225 - 0.7267 ▲
- USD/CAD: 1.2728 - 1.2824 ▼