Dollar Outlook Uncertain Ahead of Fed Meeting

The US dollar outlook is uncertain ahead of the Fed's FOMC meeting today. Oil prices have rebounded, snapping a three-day decline in European and US bond yields. The dollar is mostly narrowly mixed against G10 currencies.

New hostilities in the Middle East have lifted oil prices for the first time in four sessions, with the price of September crude futures rising to $83.30 from around $77.80 yesterday. This has had a mixed impact on currency markets, with some emerging market currencies performing well despite continued volatility in equity markets.

The dollar's fixings have been set at new three-year lows by the PBOC, while Fed funds futures are discounting about nine points of a hike, implying a 1-in-3 chance of a rate increase today. Despite softer-than-expected inflation data and moderating June and July CPI, the war and tariffs continue to underpin price pressures.