The USD has been ticking higher into the Fed announcement, recouping some of the ground lost over the last couple of days. The USDIndex has printed a high at 92.66, lifting above both yesterday’s opening and Tuesday’s closing level on route, though remaining shy of yesterday’s peak at 92.84. EURUSD has concurrently pegged a low at 1.1791, which is 50 pips down on yesterday’s peak. The pair last week edged out a four-month low at 1.1752 though has essentially been flatlining for nearly two weeks now, with the down move from the late May highs above 1.2250 having petered out.
The USD has also managed to work back against the pound, which has been outperforming over the last day (sharply lower new Covid cases in the UK, large IMF UK growth forecast upgrade). USD-JPY has at the same lifted back above the 110.00 level, up by more than half a big figure from yesterday’s low. Some market commentaries have been talking about month-end lows as being dollar supportive. As for the looming FOMC announcement, most are expecting this will be a non-event, especially as it will not include quarterly forecasts. Nonetheless, the risk is that policymakers will sooner or later suggest they are closing in on announcing a timeline for QE. We don’t anticipate it will be today, however, which in the event might be a mild dollar negative in terms of immediate impact.
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