US Dollar Fluctuates as Fed Decision Looms

US Dollar (USD) Wavers amid Changing Market Mood

The US Dollar (USD) fell yesterday morning as an increase in risk appetite sapped appeal of the safe-haven currency.

However, the market mood soured later in the afternoon, which helped USD claw back some losses.

Today the ‘Greenback’ may be muted as investors brace for the Federal Reserve’s rate decision this evening. While the Fed is expected to leave rates unchanged, any hints at a possible hike in the future could see the US Dollar climb.

Pound (GBP) Mixed amid Lack of Data

The Pound (GBP) was mixed yesterday, with a lack of economic data leaving the increasingly risk-sensitive currency to trade on market mood.

A cautiously upbeat tone saw GBP firm against its safer rivals. However, hesitancy ahead of the Bank of England (BoE) interest rate decision kept Sterling subdued.

This morning, the Pound has slumped after the UK’s consumer price index came in lower than forecast. Core inflation cooled far more than expected, dropping from 6.9% to 6.2%, rather than 6.8%. This has dented BoE rate hike bets, dragging GBP down.

Euro (EUR) Slips as CPI Downwardly Revised

The Euro (EUR) faced headwinds yesterday as a slight downward revision to the Eurozone’s final CPI reading for August dampened European Central Bank (ECB) rate hike bets.

In addition, a slight improvement in market sentiment saw the safer single currency weaken against its riskier peers.

Later today, a speech from ECB policymaker Isabel Schnabel could impact EUR. Could dovish comments dent the Euro?

Canadian Dollar (CAD) Rises as Inflation Accelerates

The Canadian Dollar (CAD) marched higher yesterday as Canada’s latest CPI showed that inflation accelerated more than forecast last month, thereby reviving bets on another hike from the Bank of Canada (BoC).

Today, CAD investors will be curious to read the BoC’s meeting minutes from its last rate decision. Any signs that an uptick in inflation could lead to further tightening may see the ‘Loonie’ strengthen.

Australian Dollar (AUD) Subdued amid Cautious Trade

The Australian Dollar (AUD) wavered slightly lower overnight as a cautious market mood tempered demand for the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Unable to Sustain Gains

The New Zealand Dollar (NZD) found fleeting success last night after New Zealand’s currency account deficit unexpectedly shrank. However, the ‘Kiwi’ shed its gains as the session progressed, with a nervous mood weighing on the riskier currency.

Samuel Birnie

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