November 3, 2021

USD Shows Strength Ahead of FOMC Policy Announcement

 The opening of the Asian session was adorned with the strength of the greenback dollar ahead of the FOMC’s monetary policy announcement early Thursday morning which is expected to see a reduction in bond purchases by the Federal Reserve (Fed) begin.

At the time of writing, the dollar index that measures the strength of the greenback dollar against most major currencies is trading at 94.08.

The market is now awaiting the publication of US private sector ADP employment data and the results of the FOMC meeting today, which will bring major movements in the market.

Investors expect U.S. policymakers to decide to reduce its monthly bond purchases by $ 15 billion per month and end them by mid -2022.

If the Fed announces a bigger cut, the U.S. dollar may rise to its latest high this year against its major rivals.

Meanwhile, the Aussie dollar and the pound were among those exhibiting poor performance following the dovish decision of the Australian Central Bank (RBA) and uncertainty over whether the Central Bank of England (BOE) will raise rates or not at a policy meeting on Thursday.

The Aussie dollar traded weaker around a nearly two -week low of 0.7435 against the US dollar, while the pound traded at a three -week low of 1.3630.

The euro remained weak due to the strength of the US dollar, as well as the final reading of the revised German manufacturing PMI data for October to 57.8 from 58.2 due to global supply chain disruptions.