Today’s most important event is the FOMC meeting, which is one of the big meetings with updated projections and a press conference. Economists expect to see the U.S. central bank hiking its rate to a target range of 1.00 to 1.25% today, though expectations for further rate increases are fading. However, some analysts are suggesting that Wednesday’s widely expected interest rate hike could be final hike of 2017.
- The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.07% to 96.90.
- Overnight, the USD dropped to a two-month low against the CAD on Tuesday, following a surge in demand for the CAD, after a senior central bank official suggested that Canadian interest rates are set to rise.
- GBP/USD rose after the latest UK inflation rate hit its highest level since June 2013, rising to 2.9% from 2.7% April, well above the Bank of England’s 2% target.
- Gold gained in Asia on Wednesday in cautious trade as investors awaited the latest Fed rate decision and forward-looking guidance on plans to trim its massive balance sheet. In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.
