The US Dollar took a breather after its latest rally as markets ponder the likely outcome of the next Federal Reserve policy meeting due to kick off later today and conclude tomorrow with a rate decision. Analysts believe that the Fed is likely to raise its benchmark lending rate by 25 basis points to 1.50%; if the Fed does raise rates, it will be only the fifth time in two years. More importantly, FX traders will be keen to learn of the Fed’s gauge of US economic health, with analysts and forecasters now predicting a strong enough outlook to warrant a minimum of two and possibly three rate increases over the next year.
As reported at 11:01 am (GMT) in London, the EUR/USD was trading at $1.1775, a gain of 0.02%; the pair earlier hit a peak of $1.17927 while the session low is currently at $1.17630. The GBP/USD is down 0.04% and trading at $1.3336; the pair has ranged from $1.3310 to $1.3380 in the session.
Kiwi Higher on RBNZ Appointment
In New Zealand, the Kiwi Dollar struck a 2-week peak on news that Adam Orr has been appointed as the new head of the Reserve Bank of New Zealand. FX traders were relieved by Orr’s selection given his experience and belief that he will maintain the status quo to a large extent. The NZD/USD was trading at $0.6952, a gain of 0.62%, not far from the session high of $69531.