The U.S dollar, on Wednesday, March 15, weakened in European trade, staying range-bound ahead of an expected U.S. Federal Reserve interest rate hike.
The dollar index, which tracks the greenback against a basket of six rival currencies, was off 0.2 percent, at 101.50.
Against the yen, the greenback edged 0.1 percent lower to 114.65, remaining shy of last week’s peak of 115.51, its highest level since Jan. 19 as expectations built for the rate increase.
Fed fund futures price in a more than a 90 percent chance of a rise in rates on Wednesday, and attention is now focused on whether the U.S. central bank is now on course for regular three-monthly rises in the months and years ahead.
“The 25 basis point hike is fully priced in, so that’s not even going to be a factor…it’s more what the Fed’s path is going to be going forward,” said Societe Generale currency strategist Alvin Tan in London.
“We’re thinking the 2017 dots indicating three hikes in total is unlikely to be changed. But there’s a good chance that the rate path for 2018 and 2019 could be raised slightly higher, in terms of the median dot path.”
U.S. producer prices rose more than expected last month, marking the most robust year-on-year gain in nearly five years.
The Bank of Japan also began a two-day monetary policy meeting on Wednesday. It is expected to hold its policy steady and stress that inflation is nowhere near levels that justify talk of withdrawing its massive stimulus.
Sterling jumped to a week’s high of $1.2258 in early trade in Europe, rebounding from the previous day’s eight-week low hit on worries of a painful and prolonged Brexit process. It was last up just over half a percent on the day at $1.2230.
British Prime Minister Theresa May won parliamentary backing on Monday to begin the process of leaving the EU and start two years of talks that will shape the future of Britain and Europe, as Scotland mulled a possible second independence referendum.
The euro edged up 0.3 percent to $1.0631. It remained below its Monday high of $1.0714, as concerns about Wednesday’s Dutch parliamentary election offset market speculation that the European Central Bank could be poised to wind down its stimulus programme.
