Peter Nurse

Investing.com reports that the dollar traded relatively unchanged Wednesday at higher levels. Keep an eye out for Federal Reserve decisions later and for forward guidance. 

The Dollar Index, which measures the greenback’s performance against six other currencies at 2:55 am ET (0755 GMT) was slightly lower at 94.055 but still close to the near three-week high of 94.313.

Additionally, rose 0.1% to 1.1587, marginally above the year’s low of 1.1522, while fell 0.1% to 113.89, below the 2021 peak of 114.69.

Widely expected, the Fed will announce a tapering its $120 billion monthly bond buying program. This is based on the Fed’s assessment that the U.S. has sufficiently recovered from the effects of the pandemic to allow for a decrease in support.

“The Fed is ready to pull the tapering trigger this Wednesday and we see risks clearly tilted towards a swifter process than anticipated by the consensus,” said analysts at Nordea, in a note.

Fed policy makers are talking about the potential for more interest in rising prices. With inflation at its highest level in 30 years, this is a reflection of their thoughts on the time when interest rates ought to rise. Officials have said rate hikes won’t be on the table until the bond-buying program ends. 

“Our new base case is a hike in June, September and December next year after a tapering process ending in April/May,” Nordea added. The majority of analysts believe that the purchase will end by June. 

Other currencies rose 0.1%, to 1.3626. That’s just below a 2-week low. It was ahead of the Thursday close. Markets could price in an increase of 0.1% by the central bank, although the currency is generally weak, which suggests that a disappointing outcome may be possible. Data from earlier shows that expectations continue to be exceeded despite ending a stamp duty tax holiday.

traded flat at 3.9763 and also flat at 4.6044, with Poland’s central bank expected to raise interest rates for a second month as inflation runs at its fastest pace in two decades.

In a Bloomberg survey of 30 economists, 16 predicted that the benchmark would rise by a quarter to 0.75% and 13 anticipated it rising by a fifth. One respondent forecast that borrowing costs would remain in check.