dxy daily chart
Dollar stands tall as Fed heads toward taper
The dollar held within striking distance of the year's peaks on the euro and yen on Wednesday, as investors looked for the Federal Reserve to begin unwinding pandemic-era policy support faster than central banks in Europe and Japan.
Moves were slight in Asia ahead of the Fed's meeting later in the day and the dollar bought 113.84 yen, against a 2021 peak of 114.69, and traded at $1.1582 per euro against the year's top of $1.1522 per euro. The U.S. dollar index held overnight gains to sit at 94.074.
The Fed is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT.
But traders are focused on clues around what that means for timing of rate rises, after a month of seismic bond market moves in anticipation of hikes as soon as next year.
"The market is not easily convinced that there will be an extended lag between the completion of taper and the start of the rate hiking cycle," said OCBC Bank rates strategist Frances Cheung.
"Fed Fund futures pricing of two rate hikes by end-2022 does not look as stretched as the pricing in markets such as SONIA futures (GBP) or bank bill futures (AUD)."
A day ago, the Reserve Bank of Australia abandoned its short-term yield target and dropped its expectation of holding rates at record lows until 2024, though the Aussie fell because the bank also pushed back on aggressive pricing for 2022 hikes.
Dollar stands tall as Fed heads toward taper
The dollar held within striking distance of the year's peaks on the euro and yen on Wednesday, as investors looked for the Federal Reserve to begin unwinding pandemic-era policy support faster than central banks in Europe and Japan.
Moves were slight in Asia ahead of the Fed's meeting later in the day and the dollar bought 113.84 yen, against a 2021 peak of 114.69, and traded at $1.1582 per euro against the year's top of $1.1522 per euro. The U.S. dollar index held overnight gains to sit at 94.074.
The Fed is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT.
But traders are focused on clues around what that means for timing of rate rises, after a month of seismic bond market moves in anticipation of hikes as soon as next year.
"The market is not easily convinced that there will be an extended lag between the completion of taper and the start of the rate hiking cycle," said OCBC Bank rates strategist Frances Cheung.
"Fed Fund futures pricing of two rate hikes by end-2022 does not look as stretched as the pricing in markets such as SONIA futures (GBP) or bank bill futures (AUD)."
A day ago, the Reserve Bank of Australia abandoned its short-term yield target and dropped its expectation of holding rates at record lows until 2024, though the Aussie fell because the bank also pushed back on aggressive pricing for 2022 hikes.