Dollar holds gains ahead of Fed policy signal, RBNZ decision
TLT•The dollar held at a two-week high ahead of central bank decisions, with markets widely expecting the Federal Reserve to leave rates unchanged while signalling the likelihood of a December move. The kiwi was steady before an expected RBNZ rate hike, while the Australian dollar rose 0.3% after quarterly inflation reached 1.3%.
1. Dollar awaits Fed decision
The US dollar held at a two-week high on Wednesday as markets awaited policy decisions from central banks. Fed funds futures indicated a 91% probability that the Federal Open Market Committee would leave its policy rate unchanged. The dollar index rose 0.3% on Tuesday to 102.40, its highest since October 14, while the US 10-year Treasury yield was unchanged at 4.9967%.
2. Asian currencies and inflation
The New Zealand dollar was level at $0.5682 ahead of an RBNZ decision, with economists generally expecting an interest rate hike. The Australian dollar gained 0.3% to $0.7047 after inflation rose 1.3% in the third quarter, up from 0.6% in the previous quarter. Core inflation was 1%, matching market estimates, and the annualised rate remained above target at 3.6%. RBA Governor Michele Bullock told lawmakers the central bank would debate next week whether four rate hikes this year would be sufficient to return inflation to target.
