Investing.com – The U.S. dollar rose on Wednesday, hitting its highest level in November ahead of the end of the Federal Reserve’s latest policy meeting.
At 04:00 ET (0900 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 106.240 after earlier rising to 106.380, near 106.51. , which could be the highest figure since November 1.
Does the Fed expect to cut rates this year?
The bank wraps up its final two-day meeting later in the session and is expected to keep interest rates at an elevated 5.25%-5.5%.
Progress toward the Fed’s medium-term inflation target of 2.0% has stalled somewhat recently, as evidenced by Tuesday’s cost-of-employment index, which rose an elevated 4.2% year over year in the first quarter, matching the fourth-quarter gain. .
That led to futures markets cutting rates by just one-quarter of a point by the end of the year, down from five at the start of the year, and that hawkishness benefited the dollar.
The focus will be on what the Chairman has to say at his press conference, especially since the bank will not be updating economic forecasts this time.
Investors will be awaiting guidance on whether the Fed still plans to cut interest rates at some point this year.
Euro calm as inflation remains stable
In Europe, the price rose to 1.0669, trading in limited volumes as much of the European continent is on holiday.
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Data released on Tuesday showed the rate held steady at 2.4% in April, bolstering an already strong case for interest rates to be cut next month.
The ECB has all but promised a rate cut on June 6, provided there are no unpleasant surprises in wages or prices.
“The Governing Council of the ECB believes that if this inflation outlook continues, it would be appropriate to begin reducing the current level of monetary tightening in June,” De Cos, who is also the head of the Spanish central bank, told the Bank of France. Spain’s annual report on Tuesday.
traded virtually unchanged at 1.2491 in subdued trading.
As it stands, money markets are now fully priced in for the Bank of England’s first quarter-point rate cut at its August 1 meeting – with about a 50-50 chance of such a change happening as early as June 20.
Ian retreats; Is additional intervention required?
In Asia, the rate rose 0.1% to 157.91, with the yen falling even after suspected government intervention sparked a sharp rebound in the currency.
The pair is still a long way from the 34-year high of 160.245 seen earlier in the week, but Japanese authorities will be concerned that the yen appears to be retreating again, potentially forcing them to re-enter the market.
Other Asian currencies were muted amid holidays and Fed caution.
rose 0.2% to 0.6482, with the Australian dollar strengthening ahead of the US Bank meeting next week.
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The RBA could potentially take a hawkish stance following stronger-than-expected inflation figures in the first quarter.