LONDON: The dollar wallowed near a two-month low against a basket of major currencies on Wednesday as the market hedged the risk that the Federal Reserve might adopt a more dovish tone in statements following the two-day policy review.
The dollar index .DXY last stood at 96.141. On Tuesday it fell as far as 96.011, reaching a low last seen on March 5.
The key risk for the dollar is the Fed’s post-meeting policy statement due at 1800 GMT. The Fed is widely expected to keep policy unchanged and the focus will be on its economic assessment.
The central bank is considering monetary policy at a time when the U.S. economy has hit a soft patch, blamed largely on harsh winter weather, a strong dollar and disruptions at West Coast ports.
“Our expectation is the statement will acknowledge the Q1 data weakness but try and look through it, and that there will be no change to the characterization of inflation prospects,”
said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.
