Dollar Trades Strong Before FOMC Meeting Conclusion
The US dollar moved higher against its major trading partners early Tuesday ahead of an extremely busy data schedule before the conclusion of the two-day Federal Open Market Committee meeting Wednesday, the first FOMC meeting of 2022.
Data on consumer confidence and home prices headline Tuesday’s schedule. Releases from the Philadelphia and Richmond Federal Reserves and the weekly Redbook retail sales report are also on the schedule.
Federal Reserve officials stay in a quiet period until Thursday. Analysts expect the FOMC’s post-meeting statement Wednesday to signal a possible rate hike in March after the tapering of asset purchases is completed.
The data schedule will be full through the end of the week, with new home sales Wednesday, initial jobless claims and the first look at Q4 gross domestic product growth Thursday, and personal income and spending Friday.
A quick summary of foreign exchange action heading into Tuesday shows that EUR-USD fell to 1.1276 from 1.1325 at the Monday US close and was below the 1.1313 level a day earlier.
The German IFO survey for January released earlier Tuesday showed an improvement from December, breaking a string of declines. An increase in the expectations reading more than offset a decline in the reading of current conditions.
The European Central Bank’s monetary policy council meets on Feb. 3. GBP-USD declined to 1.3453 from 1.3491 at the Monday US close and 1.3495 a day earlier. Industrial output in the UK grew at a slower pace in January than December, data from CBI released earlier Tuesday showed.
Read: U.S. Dollar Trades Mixed Ahead of Data Schedule
Political scandals in the UK are a main topic of interest currently, but markets are also anticipating a rate increase at the Bank of England’s meeting on Feb. 3 as a protection against rising prices and wages.
USD-CAD rose to 1.2645 from 1.2636 at the Monday US close and was well above the 1.2609 level a day earlier. There are no Canadian data scheduled for release Tuesday, so the pair’s movements will be dictated by the busy US schedule.
The Bank of Canada will announce its policy decision Wednesday shortly before the Fed’s statement. Markets are still expecting a Bank of Canada rate increase, though the odds are a bit lower in recent days.
USD-JPY rose to 114.0183 from 113.9812 at the Monday US close and 113.7635 a day ago. There are no Japanese data scheduled for release Tuesday.
Tighter COVID-19 restrictions were implemented at the end of the last week to last through mid-February could impact the Japanese economy going forward. # Dollar Trades Strong Before FOMC Meeting Conclusion
