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Forex News: Dollar Strengthens Before Fed Decision

Dollar Strengthens Before Fed Decision

01/29/2020 - 09:27:00 (RTTNews)

(RTTNews) - The U.S. dollar climbed against its major counterparts in the European session on Wednesday, as investors watched the latest developments in the coronavirus outbreak and awaited the Federal Reserve's monetary policy decision due later in the day.

The Fed's policy statement is due at 2 pm ET, followed by Chairman Jerome Powell's press conference half an hour later.

The central bank is expected to stand pat on interest rates, leaving it in a range of 1.50 percent to 1.75 percent.

The Fed is likely to make no major changes to their policy statement, as the U.S. data since the December meeting did little to shift expectations for the growth outlook.

On the economic front, National Association of Realtors' Pending Home Sales Index for December will be released at 10.00 am ET. The consensus is for an increase of 0.4 percent, while it was up 1.2 percent in the prior month.

The greenback traded mixed against its major counterparts in the Asian session. While it held steady against the franc and the pound, it rose against the yen. Versus the euro, it trended lower.

The greenback rose to 0.9760 against the franc, its biggest since January 10. The next possible resistance for the greenback is seen around the 0.99 level.

The greenback edged up to 1.2995 against the pound, after falling to 1.3030 at 5:00 pm ET. If the greenback rallies again, 1.27 is seen as its next resistance level.

Data from Nationwide Building Society showed that UK house prices increased at a faster pace in January.

House prices grew 1.9 percent year-on-year in January, following a 1.4 percent rise in December. Prices were expected to gain 1.5 percent. A similar faster growth was last reported in November 2018.

The U.S. currency climbed to its highest since December 29 against the euro, at 1.0994. This followed a 2-day low of 1.1028 seen at 7:30 pm ET. The greenback is likely to locate resistance around the 1.08 level.

Data from the European Central Bank showed that Eurozone broad money supply grew at a slower pace in December and private sector credit growth accelerated.

The broad monetary aggregate, M3 increased 5 percent in December from last year, but slower than the 5.6 percent rise in November.

The greenback gained to 1.3188 against the loonie and 0.6742 against the aussie, reversing from its early low of 1.3155 and a 2-day low of 0.6777, respectively. On the upside, 1.33 and 0.625 are possibly seen as the next resistance levels for the greenback against the loonie and the aussie, respectively.

The greenback moved up to near a 2-month high of 0.6512 against the kiwi, from a 2-day low of 0.6552 set in the Asian session. Next immediate resistance for the dollar is seen near the 0.63 level.

The greenback ticked up to 109.16 against the yen in choppy trading. Earlier in the Asian session, the greenback has set a 5-day peak of 109.27 per yen. The greenback is likely to target resistance around the 111.00 mark.

Data from the Cabinet Office showed that Japan's consumer confidence remained unchanged in January.

On a seasonally adjusted basis, the consumer confidence index remained unchanged at 39.1 in January. Economists had expected a score of 39.5.

Looking ahead, U.S. pending home sales for December are due in the New York session.

The Federal Reserve announces its interest rate decision at 2:00 pm ET. Economists widely expect the central bank to keep benchmark rate in a range of 1.50 percent to 1.75 percent.

For comments and feedback: contact editorial@rttnews.com

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