Dollar Little Changed as Traders Await Fed Meeting for Catalyst

  • Currency traders eyeing any shift in guidance on rate hikes
  • Pound climbs even as Sturgeon details steps for Scottish vote

Fed's Rate Path in Focus Now That March Is Certain

The dollar hovered near flat as traders looked to the Federal Open Market Committee’s two-day meeting starting Tuesday as a catalyst for the greenback’s next move.

The U.S. currency traded within narrow ranges as traders squared positions before the central-bank gathering. Market pricing reflects almost three Fed hikes this year, and dollar bulls are looking for signs that four hikes in 2017 may be an option.

  • “Given that an interest rate hike is essentially fully priced in, we expect the tone and forward guidance of the Fed to influence the U.S. dollar’s immediate prospects,” Eric Viloria, currency strategist at Wells Fargo Securities LLC in New York, wrote in a note. Over time, “we still expect further U.S. dollar gains.”
  • The greenback climbed the last two weeks, buoyed by expectations that the Fed will boost rates. Further gains may hinge on whether the Trump administration can deliver pro-growth policies, and when.
  • GBP climbed even after Scottish First Minister Nicola Sturgeon said steps for a new independence referendum would be taken as early as next week.
  • EUR was weighed by political concerns surrounding Dutch elections; a spiral of increasingly hostile rhetoric threatens to overshadow the final stretch of campaigning and influence voting, traders in London said.
  • Some information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly

— With assistance by Vassilis Karamanis

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