Dollar steady ahead of Fed decision; focus on UK budget
TLT•The dollar held near a two-week high ahead of the Federal Reserve’s rate decision, while sterling slipped before the UK budget. Markets expected the Fed to hold rates, while a 25-basis-point Canadian rate hike was expected and the New Zealand dollar fell after its central bank held rates at 2.75%.
1. Dollar awaits Fed decision
The dollar held onto gains on Wednesday after reaching a two-week high ahead of the Federal Reserve’s interest rate decision. The dollar index was at 102.37, and the 10-year US Treasury yield rose 1 basis point to 5.0%. Traders broadly expected no change in Fed policy, while pricing showed a 78% chance of an increase of at least 25 basis points in December.
2. Sterling slips before budget
Sterling fell 0.1% to $1.328 as investors awaited the UK government’s budget plans, due at 1230 GMT. Investors were watching how the government planned to raise revenue; analysts expected taxes on banks, gambling firms and online marketplaces. The article said significant reliance on borrowing could spark a selloff in sterling and gilts.
3. Other central bank decisions
The Canadian dollar edged up 0.1% to C$1.403 per US dollar ahead of an expected Bank of Canada rate increase of at least 25 basis points. The New Zealand dollar fell as much as 1.3% to $0.5609 after the Reserve Bank of New Zealand held its rate at 2.75%, surprising most economists surveyed.
