Dollar Falls Before Fed Meeting; Australian Dollar Also Down By Investing.com

By Peter Nurse

Investing.com – The dollar stabilizes at the beginning of the trading day in Europe this Tuesday in anticipation of the last meeting of the Federal Reserve, while the Australian dollar weakens sharply after the central bank of the country adjusted the monetary policy less than many expected.

At 9:00 a.m. (CET), the, which tracks the evolution of this currency against a basket of six other major currencies, fell slightly to 93.843, after falling on Monday from two-and-a-half week highs of 94.313.

On the other hand, he fell 0.7% to 0.7470 after he surprised the market by not raising his interest rates currently at 0.1%, underlining that inflation was still too low to raise it short term.

However, the Reserve Bank of Australia has abandoned its policy of controlling the yield curve, saying that it would no longer attempt to limit the yield on government debt to three years. It also removed its previous forecast that rates were unlikely to rise until 2024, but traders expected a more aggressive stance given strong domestic inflation pressures.

The focus is now on the Federal Reserve’s latest two-day monetary policy meeting, which will begin on Tuesday.

The US central bank is expected to announce a reduction in stimulus, especially after an unprecedented quarterly rise in the cost of employment index on Friday illustrated the degree of inflationary pressure today.

“This measure had been a favorite of the Greenspan Fed in the 1990s and a sizable rise in this figure will undoubtedly unsettle some members of the core of the FOMC,” analysts at ING (AS 🙂 say in a note. “We believe this will add to the arguments in favor of a tapering announcement by the Fed on Wednesday.”

A survey by Bloomberg suggests that the Fed will revise the current rate of purchases of $ 120 billion a month by reducing Treasury purchases by $ 10 billion a month and purchases of mortgage-backed securities by $ 5 billion a month.

Economists surveyed are more divided on when the central bank will start raising interest rates, with a small majority suggesting it will be early 2023 rather than 2022.

Additionally, the pair is down 0.3% to 113.65, continuing to consolidate below the nearly four-year high of 114.69 on October 20, while the pair rises to 1.1610. .

The pair fell to the 1.3667 level ahead of Thursday’s meeting, in which the central bank could raise interest rates for the first time in years.

UK inflation appears set to rise to 5%, more than double the Bank of England’s 2% target, but the country’s economic recovery from last year’s slump appears to be slowing as the Government withdraws programs from key support for households and businesses.

Legal warning: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.