Dollar Pauses Ahead of Fed Decision as Oil Prices Surge
The US dollar held steady on Wednesday, near a one-month high, as traders awaited the Federal Reserve's interest rate decision. Oil prices rose after the US and Saudi Arabia launched strikes on Iran-backed groups in Iraq, citing responsibility for drone attacks on Saudi oil facilities.
The dollar index eased 0.15% to 101.27, with investors staying on the sidelines ahead of the Federal Open Market Committee's decision. Markets are pricing in a roughly 30% chance of a 25-basis-point hike.
Sim Moh Siong, an OCBC strategist, believes that even if there is no rate hike, the Fed's messaging will be more important than the decision. He expects a hawkish guidance, which would keep the dollar supported.
The Australian dollar slid after data showed domestic consumer prices rose at a slower pace in the June quarter, reducing the chance of further rate hikes from the Reserve Bank of Australia.