The U.S. dollar continued to be weaker against most major rivals in the Asian session on Wednesday, as uncertainty prevailed ahead of the U.S. Federal Reserve’s monetary policy announcement later in the day.
Investors remained cautious ahead of the U.S. Federal Reserve’s monetary policy announcement due later in the day. The Fed is widely expected to leave interest rates unchanged at the meeting, but traders will be paying close attention to comments regarding a rate hike at the June meeting.
A recent series of weak economic reports has led many analysts to predict that the Fed will delay its first rate hike until later this year.
After reporting a significant rebound in U.S. consumer confidence in the previous month, the Conference Board released a report on Tuesday showing that its consumer confidence index unexpectedly pulled back sharply in the month of April.
The Conference Board said its consumer confidence index tumbled to 95.2 in April from an upwardly revised 101.4 in March. The steep drop came as a surprise to economists, who had expected the consumer confidence index to climb to a reading of 102.5.
First quarter GDP data from the U.S., due later in the day is also in focus.
Meanwhile, Greece continued its talks with creditors to resolve the outstanding differences for urgently unlocking the financial aid, without which the beleaguered nation could go bankrupt. The fallout of such a scenario could be catastrophic for world markets.
The dollar has been trading lower in recent sessions, amid an uncertain view about the timing of U.S. interest rate hike. Since April 23, the U.S. dollar has lost 1.12 percent against the yen. The greenback has lost 2.32 percent against the euro and 2.73 percent against the pound from April 21.
In the Asian trading today, the U.S. dollar fell to nearly a 2-month low of 1.5345 against the pound and a 9-day low of 118.75 against the yen, from early highs of 1.5327 and 118.89, respectively. If the greenback extends its downtrend, it is likely to find support around 1.56 against the pound and 118.00 against the yen.
Against the euro, the greenback edged down to 1.0980 from an early high of 1.0965. On the downside, 1.11 is seen as the next support level for the greenback.
Looking ahead, Swiss UBS consumption indicator for March and U.K. nationwide house price index for April are slated for release at 2:00 am ET.
In the European session, Eurozone M3 money supply data for March and business climate and consumer sentiment indices for April are due to be released.
At 3:25 am ET, Germany’s Bundesbank board member Andreas Dombret is expected to speak on “Allowing them to fail – Banks and the market economy”, in Berlin.
In the New York session, preliminary German inflation report for April, Canada industrial product price and raw materials price indices for March, U.S. first quarter GDP data and U.S. pending home sales data for March are set to be published.
At 2:00 pm ET, Federal Reserve will announce its decision on monetary policy. The Fed is expected to hold rates at 0.25 percent.
The material has been provided by InstaForex Company – www.instaforex.com