Dollar Down Ahead of an Expected U.S. Interest Rate Hike

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Dollar Down Ahead of an Expected U.S. Interest Rate Hike
Credit: © Reuters.

By Zhang Mengying

Investing.com – The dollar was down on Wednesday morning in Asia ahead of an expected U.S. interest rate hike from the U.S. Federal Reserve.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.19% to 106.99 by 12:35 AM ET (4:35 AM GMT).

The USD/JPY pair inched up 0.08% to 137.01.

The AUD/USD pair inched down 0.04% to 0.6935, and the NZD/USD pair inched up 0.05% to 0.6236.

The USD/CNY pair inched up 0.04% to 6.7661, while GBP/USD pair gained 0.27% to 1.2057.

The EUR/USD jumped 0.37% to 1.0151. Europe’s growth remains vulnerable to Russian gas supplies, as flows along the Nord Stream pipe from Russia to Germany fell on Tuesday and will drop further on Wednesday.

“Energy supply is likely to remain a key issue for the European economy over the coming months,” Commonwealth Bank of Australia currency strategist Kristina Clifton told Reuters.

“The euro can trade below parity, more than just briefly (and) sooner rather than later.”

The Fed is widely expected to hike interest rates by another 75 basis points at the conclusion of its policy meeting on Wednesday.

The central bank’s moves to tame inflation would cement a combined 150 basis points increase over June and July, the steepest hike since the 1980s.

“It’s more of a wait-and-see rather than the expectation of a large surprise,” NatWest Markets emerging markets strategist Galvin Chia.

He expects the U.S. dollar to remain supported by safe haven flows over the longer term, amid a darkening global outlook.

U.S. Conference Board (CB) Consumer Confidence dropped to 95.7, a near two-year low in July amid persistent worries about soaring inflation and higher rates.

 

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