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Dollar Edges Higher as Fed Keeps Rates Steady

Investing.com – The U.S. dollar crept higher against its rivals on Wednesday as the Federal Reserve stood pat on rates, and looks set to continue with its pause despite calls for rate cut.

The U.S. dollar index, which measures the green against a trade-weighted basket of six major currencies, fell by 0.20% to 97.01.

The Federal Reserve left interest rates unchanged, and vowed to continued with its patient approach to monetary policy, raising expectation that the central bank is unlikely to give into calls to cut rates.

"On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent," the Fed said in a statement.

The unchanged decision on rates arrived just hours before data showed manufacturing growth undershot economists' expectations.

ISM manufacturing data for April showed a downtick to 52.8, missing expectations of 55.0. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy.

The slowdown in manufacturing activity comes just days after data showed the U.S. economy grew at a 3.2% annualized rate, above the 2.2% pace in the final three months of last year, but the rebound was driven by temporary factors.

Gains in the the dollar were limited by a 0.43% rise in GBP/USD to $1.3090 on better-than-expected U.K. housing data.

EUR/USD fell 0.17% to $1.1197 on thin volumes as European markets were shut for Labor Day.

USD/CAD rose 0.37% to C$1.3435 as the loonie was hurt by a fall in oil prices after the U.S. Energy Information Administration weekly petroleum reported showed U.S. crude stockpiles rose much more-than-expected.

USD/JPY rose 0.12% to Y111.55 as safe-haven yen came under pressure amid an uptick in risk sentiment as U.S. markets remained on track to close at fresh record highs.

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