Home Forex Dollar Holds Steady as Aussie Gains Ahead of Fed Meeting

Dollar Holds Steady as Aussie Gains Ahead of Fed Meeting


The dollar held gains against the yen and euro on Tuesday after its weakest day in a week. Investors are focused on the U.S. Federal Reserve meeting, which concludes on Wednesday.

The Fed is expected to raise rates for the first time in nearly a year at the conclusion of its meeting. The central bank will also announce its updated economic outlook. Investors will be looking for insight into the outlook for inflation and the Fed’s projected pace of rate hikes next year.

Market players are concerned that the Fed may take a cautious tone on its policy outlook for 2017.

The yen was at less than 115 yen per dollar in Asian trade, but settled at 115.34, ending the day down 0.2%. The yen was at 116.12 per dollar on Monday, its highest level since February.

The euro was virtually unchanged at $1.0629 after gaining 0.7% on Monday.

The pound inched higher. Sentiment improved on data that showed higher-than-expected inflation last month. Comments from Philip Hammond also boosted the currency, with the finance minister supporting a transition period to exit the EU as smoothly as possible.

Elsewhere, the Australian dollar held gains against its U.S. counterpart, driven higher by upbeat data out of China. The currency saw gains despite downbeat housing data.

The Aussie gained 0.08% to trade at 0.7502.

China announced that retail sales were up 10.8% year-on-year in November, beating expectations of a 10.1% gain. Industrial production was also up 6.2%, just surpassing expectations of a 6.1% increase. Fixed asset investment came in at 8.3%, meeting projections.

China is Australia’s largest trade partner. The upbeat report pushed the Aussie higher despite weak house data.

Australia reported that the house price index increased by 1.5% in the third quarter, failing to meet expectations of a 2.3% gain. The figure represented the weakest growth since 2013.

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