Dollar Stable Ahead of Fed Meeting

Dollar Stable Ahead of Fed Meeting

On Tuesday, Sweden’s CB raised rates by 1% point. The Riksbank’s interest rate hike was higher than analysts expected, which soon led to a rapid rise in the Swedish krona against the euro and the dollar.

Nevertheless, it failed to carry on to that strength, and the euro extended recent gains, rising to a fresh six-month top of 10.846 crowns. The dollar also rose 0.36% to 10.82 crowns.

However, the Fed is the main central bank event this week, starting with a two-day interest rate meeting later on Tuesday. According to CME’s Fed monitoring, the market is fully priced in another 75 bps, which represents about a 15% chance of a very large overall percentage point increase.

The dollar index gauges the dollar versus six peers. It was 0.2% stronger at 109.82, running back to the 110.79 it hit earlier this month.

U.S. Housing Data on The List

The two-year U.S. Treasury yield, particularly sensitive to political expectations, provided further support and rose to 3.992 percent in early London trade, its highest since November 2007.

According to Francesco Pesole, the currency strategist at ING, markets would focus on U.S. housing data later in the day. However, this move may be less visible in the market’s reaction to the outcome of the Fed meeting.

The euro fell to 1.0013 against the dollar. In September, it fell to $0.9864. It hit $6 for the first time in 20 years, and the issued pound strengthened slightly to $1.1446.