This morning, the dollar index is softer as markets eye today’s FOMC meeting where traders are widely expecting the Fed to increase rates to 1.75%, their highest levels since September 2008. This follows a day of dollar strength and general dollar pair weakness.
The dollar’s weakness is helping key dollar pairs to lift off yesterday’s lows, with the EUR/USD in particular notable for its recovery. The EUR/USD sold off heavily yesterday as German ZEW sentiment crashed in below expectations. The move also saw the EUR/GBP plunge lower despite poor UK data.
The pound is flat and lagging behind its peers this morning after shrugging off poor inflation data yesterday. CPI, RPI, PPI and even the HPI came in below estimates yesterday. Brexit optimism was enough to keep the pound afloat.
The AUD/USD continues to struggle, with follow-on selling yesterday and only small gains this morning. The NZD/USD is unchanged after hefty losses Tuesday.
The yen pairs are mixed, with small gains for the USD/JPY and AUD/JPY and slight losses for the GBP/JPY.
This morning at 09.30, we have UK average earnings index, claimant count change, public sector net borrowing and the unemployment change.
US current account data is at 12.30.
At 14.30, we have crude oil inventories.
The big ticket is the FOMC meeting at 18.00, the press conference follows at 18.30.
The RBNZ rate statement is at 20.00.
The AUD/USD continues to weaken and with the FOMC meeting looming today, there could be further selling from here.