U.S. Dollar Lower Before Fed Announcement
The U.S. dollar lost ground against its major opponents in the
European session on Wednesday, as investors await the monetary
policy announcement by the Federal Reserve amid expectations that
it will strike a dovish tone due to rising coronavirus cases.
The Fed is set to announce its latest interest rate decision at
2:00 pm ET. No changes in policy are expected.
Chairman Jerome Powell will hold a press conference half an hour
All eyes are on the accompanying statement for clues regarding
alternative policy tools, including the yield curve control.
On Tuesday, the Fed extended most of its emergency lending
programs by three months, through the remainder of 2020.
Economic reports on U.S. pending home sales and wholesale
inventories for June are due later in the day.
Political impasse over the $1 trillion fiscal rescue package by
the U.S. added to worries.
President Donald Trump said on Tuesday he did not support
everything in a $1 trillion Senate Republican coronavirus relief
proposal but would not elaborate on what he didn't not like.
The greenback depreciated to 1.2979 against the pound, its
lowest level since March 10. On the downside, 1.31 is possibly seen
as its next support level.
Data from the Bank of England showed that UK mortgage approvals
increased sharply in June as the housing market reopened after the
relaxation of restrictions to curb the spread of the
The number of mortgages approved in June rose to a three-month
high of 40,000 in June from a record low 9,300 in May. Approvals
were expected to rise to 33,900.
The greenback weakened to 1.1770 against the euro, after rising
to 1.1711 at 5:00 pm ET. If the greenback extends decline, 1.195 is
likely seen as its next support level.
Data from Destatis showed that Germany's import prices declined
at the slowest pace in four months in June.
Import prices declined 5.1 percent year-on-year in June, as
expected, following May's 7 percent decrease. This was the slowest
fall since February, when prices were down 2 percent.
The greenback dropped to a 4-1/2-month low of 104.80 against the
yen from yesterday's closing value of 105.09. The greenback is
likely to find support around the 101.00 region.
Fitch Ratings downgraded Japan's sovereign rating outlook citing
the sharp economic contraction caused by the coronavirus
The outlook on 'A' rating was lowered to 'negative' from
The greenback dipped to 0.9140 against the franc, a level unseen
since May 2015. The next possible support for the greenback is seen
around the 0.88 level.
The U.S. currency reversed from its early highs of 1.3387
against the loonie and 0.6646 against the kiwi, dropping to 1.3340
and 0.6680, respectively. The greenback is seen facing support
around 1.29 against the loonie and 0.68 against the kiwi.
The greenback slipped to more than a 1-year low of 0.7194
against the aussie, from a high of 0.7149 seen at 9:30 pm ET. The
greenback may face support around the 0.73 region, if it falls
Data from the Australian Bureau of Statistics showed that
consumer prices in Australia fell 0.3 percent on year in the second
quarter of 2020.
That beat expectations for a drop of 0.4 percent following the
2.2 percent increase in the previous three months.
The U.S. wholesale inventories and and pending home sales for
June are due in the New York session.
The Federal Reserve announces its interest rate decision at 2:00
pm ET. Economists widely expect the central bank to keep benchmark
rate in a range of 0 percent to 0.25 percent.
US Dollar vs CAD (FX:USDCAD)
From Jul 2020 to Aug 2020
US Dollar vs CAD (FX:USDCAD)
From Aug 2019 to Aug 2020