Economic News:
The dollar fell slightly on Wednesday as traders braced for a key Federal Reserve policy announcement later in the day.
The dollar index, which compares the US currency to other major currencies, was down 0.14 % at 107.04. The figure is close to its two-decade high of 109.290, which was hit earlier this month.
Investors are waiting to see how far the Federal Reserve will go to tackle inflation, as concerns remain that aggressive Fed rate hikes may harm GDP.
Policymakers are considering consumer prices that are at 40-year highs, as well as a recent batch of dismal economic statistics. On Tuesday, consumer confidence in the United States fell to its lowest level in almost a year and a half, while new home price increases and new home sales also declined.
Markets have mostly priced in a 75-basis-point hike, with only a slim likelihood of a 100-basis-point increase. The spotlight will also be on Fed Chair Jerome Powell, who is scheduled to speak at a press conference on Wednesday.
Meanwhile, the euro recovered some ground against the dollar after falling 1% overnight to $1.0108, its lowest level since July 11. In early morning European trading, the euro jumped 0.19 % to $1.0137.
Fears that a decline in Russian gas supplies may harm broader European economic activity are weighing on mood surrounding the euro. Westward flows from the critical Nord Stream 1 pipeline fell on Tuesday and are anticipated to decline even further on Wednesday.
Ahead of the Fed announcement, the AUD/USD was trading near the flatline . Traders are also keeping a watch on the recent headline inflation data from Australia, which revealed that consumer prices surged at the quickest rate in 21 years.
The pound rose modestly against the dollar, with the Bank of England anticipated to announce another significant rate decision next week.
Commodities News:
On Wednesday, oil prices remained stable as fears about weakening demand outweighed industry data showing a larger-than-expected fall in US crude stockpiles.
Brent crude futures were up 15 cents, or 0.1 percent, at $104.55 a barrel. West Texas Intermediate (WTI) crude in the United States climbed 27 cents, or 0.5 percent, to $95.25 per barrel.
Following the settlement on Tuesday, the American Petroleum Institute reported that oil stocks in the United States declined by 4 million barrels last week.
This was four times the drop predicted by analysts in a Reuters poll.
The Federal Reserve of the United States is expected to raise interest rates by 75 basis points later on Wednesday, highlighting concerns about the outlook for US demand and the possibility of a stronger dollar, which would make dollar-denominated commodities more expensive for buyers holding other currencies.
The Biden administration announced on Tuesday that it will sell an additional 20 million barrels of oil from the country’s Strategic Petroleum Reserve, as part of a previously announced plan to tap the facility to help stabilize oil prices, which have been boosted by the Ukrainian conflict and a recovery in demand following the COVID-19 pandemic.
In late March, the government announced that it will release a record 1 million barrels of oil per day from the SPR for six months. The US has sold 125 million barrels from the reserve, with roughly 70 million barrels transferred to buyers.
