© Reuters. Dollar moves higher ahead of the two-day FOMC meeting due on Tuesday
Investing.com – the rise of The dollar against a basket of major currencies on Monday, after a sharp rise in U.S. treasury yields amid rising expectations the Federal Reserve will reaffirm its plan to hike rates at least once this year, when it concludes its two-day policy meeting that begins Tuesday.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.26% to 91.89.
In what has been a slow day on the economic calendar for high-level data, investors turned attention to the two-day Federal Reserve Open Market Committee (FOMC) meeting for a new perspective on the central bank’s thinking on monetary policy.
U.S. treasury yields have jumped, underpinning a move higher in the greenback, investors expect the central bank to announce that it will start unwinding its $4.5 tn bond portfolio and reaffirm its outlook that an additional rate hike this year remains appropriate.
As well as the plans of balance sheet unwinding, the Fed’s Summary of Economic Projections and dot plot are supposed to collect a large part of the attention, as investors are likely to assess whether the slowdown in the pace of inflation has changed the central bank’s longer-term interest rates.
“Away from the balance sheet, investors should focus on the Summary of Economic Projections and the well-known dot-plot.” The analysts of Morgan Stanley (NYSE:MS) said in a note. “For us, the biggest risk to our economist’s call for the status quo as a lower median longer-term dot — can-be to fall to 2.75% from 3.00%.”
The rise in the dollar has weighed on the pound sterling, which proved to be negative following a surge to a fifteen month high on Monday, despite the Bank of England, Mark Carney, the governor reiterating that an interest rate hike is on the agenda in the months to come.
GBP/USD has climbed to $1.3488, down 0.78%, while the USD/CAD gained 0.33% to C$1.2231.
The EUR/USD fell 0.05% at $1.1934 while the EUR/GBP has added 0.68% to £0.8850.
The USD/JPY rose 0.64% to Y111.53.