U.S. Dollar Declines Ahead Of Fed Decision
January 28 2015 - 6:23AM
RTTF2
The U.S. dollar slipped against its major rivals in European
deals on Wednesday, as traders await the outcome of a 2-day
monetary policy meeting by the Federal Reserve later in the day,
amid hopes that it would be patient in raising rates.
Most economists expect the Fed to adhere to its December
meeting's stance of remaining patient as it considers when to raise
rates. At the December news conference, Fed Chair Janet Yellen told
reporters that the first increase won't happen for at least couple
of meetings or before April.
Although the U.S. economy has shown steady improvement,
inflation has been falling below the Fed's target rate, due to
plunging oil prices and a surging dollar. Since the December FOMC
meeting, the U.S. economic data has been inconsistent, raising
doubts among investors regarding whether the bank may further delay
its rate hike.
The currency was lower against most major currencies on Tuesday,
following an unexpected drop in durable goods orders in
December.
New orders for U.S. manufactured durable goods unexpectedly
showed a substantial decrease in the month of December, according
to a report released by the Commerce Department. The drop was
partly due to a sharp decline in orders for transportation
equipment.
Traders focus on U.S. GDP data due Friday, for further clues
about the economy's strength. Economists call for an increase of
3.0 percent on year in the fourth quarter, after the 5.0 percent
growth recorded in the third quarter.
Retreating from an early high of 0.9089 against the Swiss franc,
the greenback fell to 0.8987. The next possible support for the
greenback-franc pair is seen around the 0.85 zone.
Swiss consumption indicator increased in December as new car
registrations surged, a report from the global financial services
firm UBS showed.
The UBS consumption indicator climbed to 1.42 in December from
1.29 in November.
The greenback edged down to 117.54 against the Japanese yen,
after advancing to 118.25 around 8:30 pm ET. If the greenback-yen
pair extends slide, it may find support around the 116.00
level.
The greenback, which strengthened to 1.5153 against the Sterling
in early deals, dropped to 1.5213. On the downside, 1.55 is seen as
the greenback's next support level.
The greenback fell back against the euro, trading around the
1.138 level. Continuation of the greenback's downtrend may take it
to a support around the 1.25 mark.
Germany's import prices declined at a faster-than-expected pace
in December, figures from the statistical office Destatis
showed.
The import price index fell 3.7 percent year-on-year in
December, faster than November's 2.1 percent decline.
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