Forex- Dollar Continues to Struggle as Fed Decision Nears

Forex- Dollar Continues to Struggle as Fed Decision Nears

© Reuters.  The dollar was at a one-day low on Wednesday. © Reuters. The dollar was at a one-day low on Wednesday.

Investing.com – The dollar continued to fall against a basket of the other major currencies on Wednesday amid concern of lackluster inflation as investors wait for the Federal Reserve’s rate decision later in the day.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, continued to hold at 93.86 by 11:31 AM ET (16:31 GMT) a one-day low.

While an interest rate hike from the Fed is highly anticipated, tepid U.S. inflation data has traders worried about the potential of future rate hikes.

U.S. consumer prices rose 0.4% in November the Labor Department reported, while the annual rate of inflation rate of inflation rose by 2.2%, in line with expectations.

But underlying inflation remained subdued, with the core consumer price index rising 0.1% in October and the annual increase in the core CPI slowing to 1.7%.

The central bank will announce its decision on rates at 19:00 GMT followed by a statement. Chair Janet Yellen will hold a news conference at 19:30 GMT.

Meanwhile the greenback was held back by concerns about potential disruption in domestic politics after . It’s the first time in 25 years that one of America’s most conservative states has elected a Democrat to the Senate.

Jones win narrows the Republicans’ Senate majority, which could make it more difficult for the Trump administration to push through legislation.

The dollar extended losses against the yen, with down 0.42% 113.07.

Elsewhere the euro gained ground against the dollar, with up 0.20% to 1.1765. Sterling continued to be bolstered by the latest UK jobs released on Wednesday, showing an uptick in pay growth in the third quarter. However the number of people employed continued to drop, the data showed.

was up 0.36% to 1.3366.

The Bank of England and the European Central Bank are to meet later in the week and are expected to hold rates steady.

Meanwhile the Australian and New Zealand dollars were up against the greenback. rose 0.66% to 0.7608 while increased 0.79% to 0.6989.

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