At 2 a.m., market players will begin scrutinizing the FOMC meeting to get an indication of the central bank's stance and direction. The US dollar traded stronger on Wednesday after recording a decline following poor risk appetite among market players ahead of the Fed meeting.
The US dollar index, which measures the strength of the greenback against major currencies, traded 0.18% stronger at 92.602. On the other hand, currencies such as the pound sterling, Swiss franc and euro each recorded depreciation against the US dollar.
The US dollar has shown a positive performance after a big change from the Fed in June. The market is currently awaiting more indications from the Fed on a rise in inflation.
According to market analysts, at this time’s FOMC meeting, the Fed is unlikely to change any policy following the Fed’s principle that seeing the recent rise in inflation may be only temporary and concerns that the rising Covid-19 case could thwart the global recovery.
The decline in U.S. bond yields, driven by concerns about high inflation and economic prospects, also cast a shadow over the movement of the U.S. dollar.
Following the Canadian inflation report showing a decline, the market’s focus shifted to the FOMC meeting later.
