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Dollar firms as investors keep eagle eye on Fed guidance
The U.S. dollar held gains against major currencies on Wednesday as investors looked to the U.S. Federal Reserve's policy meeting for indications it could start rate hikes earlier or let bond yields rise further.
Against the yen, the greenback firmed 0.1% to 109.085 yen, hovering near nine-month highs hit this week. The euro was flat versus the dollar after declining within the past three sessions.
With Fed policymakers expected to forecast the fastest U.S. economic growth in decades within the wake of COVID-19 vaccinations and $1.9 trillion in new stimulus, market participants are going to be focused on cues that the central bank could start raising interest rates in 2023, before it had said.
"It is probably going that the FOMC's economic forecasts will acknowledge the improved growth picture this year, but will still show an extended road toward conditions according to maximum employment that might put sustained pressure on inflation," Morgan Stanley (NYSE:MS) strategist Matthew Hornbach said.
"The Fed being more dovish than expected would suggest U.S. yields and therefore the dollar moving lower within the near term, particularly against risk currencies, but we still see upside risks for USD into 2Q."
The dollar index stood at 91.908, having risen for 3 straight sessions on support mainly from elevated U.S. bond yields. [US/]
The euro changed hands at $1.1902, but the common currency could test last week's 3 1/2-month low of $1.18355 on a possible delay in vaccinations.
Europe's medicines watchdog will release results of its investigation into incidents of bleeding, blood clots and low platelet counts in recipients of AstraZeneca (NASDAQ:AZN)'s corona virus vaccine on Thursday afternoon.
"Depending on the result, it could hurt the euro zone's business sentiment further and therefore the euro could face fresh selling pressure on the low vaccination theme," said Daisuke Uno, chief strategist at Sumitomo Mitsui (NYSE:SMFG) Bank.
The British pound was down about 0.1% at $1.3886 in Asian trading on Wednesday. The currency has come struggling from profit-taking after it hit a near three-year high last month on the rear of a quick vaccine roll-out.
Commodity-linked currencies including the Australian dollar, the New Zealand dollar and therefore the Canadian dollar eased slightly against the U.S. dollar, tracking weakness in commodity prices. [MET/L] [O/R]
In the crypto currency market, bit coin fell 2.2% to $55,665.45, slipping further faraway from a record high of $61,781.83 hit on Saturday.
The U.S. dollar held gains against major currencies on Wednesday as investors looked to the U.S. Federal Reserve's policy meeting for indications it could start rate hikes earlier or let bond yields rise further.
Against the yen, the greenback firmed 0.1% to 109.085 yen, hovering near nine-month highs hit this week. The euro was flat versus the dollar after declining within the past three sessions.
With Fed policymakers expected to forecast the fastest U.S. economic growth in decades within the wake of COVID-19 vaccinations and $1.9 trillion in new stimulus, market participants are going to be focused on cues that the central bank could start raising interest rates in 2023, before it had said.
"It is probably going that the FOMC's economic forecasts will acknowledge the improved growth picture this year, but will still show an extended road toward conditions according to maximum employment that might put sustained pressure on inflation," Morgan Stanley (NYSE:MS) strategist Matthew Hornbach said.
"The Fed being more dovish than expected would suggest U.S. yields and therefore the dollar moving lower within the near term, particularly against risk currencies, but we still see upside risks for USD into 2Q."
The dollar index stood at 91.908, having risen for 3 straight sessions on support mainly from elevated U.S. bond yields. [US/]
The euro changed hands at $1.1902, but the common currency could test last week's 3 1/2-month low of $1.18355 on a possible delay in vaccinations.
Europe's medicines watchdog will release results of its investigation into incidents of bleeding, blood clots and low platelet counts in recipients of AstraZeneca (NASDAQ:AZN)'s corona virus vaccine on Thursday afternoon.
"Depending on the result, it could hurt the euro zone's business sentiment further and therefore the euro could face fresh selling pressure on the low vaccination theme," said Daisuke Uno, chief strategist at Sumitomo Mitsui (NYSE:SMFG) Bank.
The British pound was down about 0.1% at $1.3886 in Asian trading on Wednesday. The currency has come struggling from profit-taking after it hit a near three-year high last month on the rear of a quick vaccine roll-out.
Commodity-linked currencies including the Australian dollar, the New Zealand dollar and therefore the Canadian dollar eased slightly against the U.S. dollar, tracking weakness in commodity prices. [MET/L] [O/R]
In the crypto currency market, bit coin fell 2.2% to $55,665.45, slipping further faraway from a record high of $61,781.83 hit on Saturday.