(Bloomberg) -- The dollar gauge rose for a third day as traders await the Federal Reserve interest-rate decision.
- The loonie trimmed losses after the Bank of Canada cut rates, matching forecasts, and dropped guidance on any further adjustments to rates as US President Donald Trump’s tariff threat looms.
- USD/CAD rose 0.3% to 1.4444, after rising as much as 0.5% earlier
- “The CAD has regained some ground and could consolidate some more if the Canadian rates investors adopt a less dovish view on the BOC in the wake of the policy meeting,” said Valentin Marinov, head of G-10 FX strategy at Credit Agricole
- “Canada’s economic picture isn’t nearly as strong as the central bank would like it to be and it’s very possible that, especially if 25% tariffs do materialize over the weekend, we’ll see much more chatter from BOC officials discussing the possibility for further very steep interest rate cuts,” said Helen Given, a foreign-exchange trader at Monex USA
- “The removal of guidance signals that the rest of the world is waiting on tenterhooks for what the US will do, both on interest rates and on trade policy,” she said
- Canadian bond yields fall, 2-year to 2.78%, lowest since 2022
- The Bloomberg Dollar Spot Index advances 0.2%
- Fed expected to leave interest rates unchanged, with traders focusing on any commentary from Chair Jerome Powell on Trump’s policies and proposed plans into their outlooks for the economy
- EUR/USD drops a third day, down 0.3% to 1.0397
- Read more: Traders Bet ECB Will Need to Deepen and Accelerate Rate Cuts
- USD/JPY fell 0.2% to 155.25
- Japanese Finance Minister Katsunobu Kato tells reporters he discussed currency and other financial and geopolitical issues with new US Treasury Secretary Scott Bessent
- GBP/USD falls 0.3% to 1.2407
- AUD/USD declined 0.5% to 0.6220; Australia’s inflation eased by more than expected in the final three months of 2024, prompting money market traders to boost bets on a rate cut next month
- The Australian dollar was the worst performer against the greenback in the Group of 10 Wednesday
Reporting by Anya Andrianova and Vassilis Karamanis
