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U.S. Dollar Inches Up Ahead of Fed’s Decision; Pound Slips

Investing.com - The U.S. dollar inched up on Monday in Asia as traders awaited the outcome of the U.S. Federal Reserve’s meeting due later this week.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.1% to 97.653 by 11:15 PM ET (03:15 GMT).

The Fed’s policy decision is due on Wednesday. While the central bank is widely expected to deliver its third rate cut this year, traders are eager to find out if that would be the end of the easing cycle, or if more cuts are on the cards.

The Fed rate decision is due just hours after a report on U.S. third quarter GDP, which is expected to show that the economy grew 1.7% in the three month to September, slowing from 2% in the second quarter.

The USD/JPY pair rose 0.2% to 108.76.

The Bank of Japan is set to announce its latest policy decision on Thursday. The central bank is expected to keep policy on hold, but the decision is said to be a close call.

The GBP/USD pair slipped 0.1% to 1.2813, while the EUR/USD pair was little changed at 1.1080.

The EU will reportedly make a decision this week on whether to delay Britain’s departure to Jan. 31.

The USD/CNY pair was near flat at 7.0573.

Zach Pandl, Goldman Sachs’ co-head of global foreign-exchange rates and emerging markets strategy, told CNBC in an interview with on Friday that he expects the yuan to show some near-term weakness against the U.S. dollar.

“We forecast a rise back to 7.20 versus the dollar, so trading towards the weak end of the band around the fix,” said Pandl.

That move will likely happen “over the course of the next month, is our best guess,” he added.

Chinese policymakers “have been using the yuan as a way to stabilize the economy, really on and off since 2015, since the currency reforms,” Pandl said.

“I don’t really see a reason for that trend to change just yet - still makes sense given the other constraints on policy to try to allow the exchange rate to be one measure to try to support domestic growth,” he added.


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