US Dollar Climbs Against Euro Ahead of Fed Meeting

The US dollar edged higher against the euro on Wednesday, ahead of the latest statement from the Federal Open Market Committee, which is expected to contain a decision to keep rates unchanged. Traders appear to have ignored a disappointing number for new home sales in June in anticipation for remarks from the monetary policy committee relating to interest rates in the near future.

In a joint release, the US Census Bureau and the US Department of Housing and Urban Development said that new home sales rose by 0.8% from 605,000 to 610,000 in June. The increase came short by 5,000 units from analyst forecasts and confirmed that the housing market was weaker last month following a lackluster existing home sales report on Monday.
However, the release passed without causing noticeable movement from the US dollar as traders held their positions ahead of the Federal Open Market Committee’s statement.
Some officials from the Federal Reserve signaled that another interest rate hike in 2017 remains a possibility. Meanwhile, other officials pointed to the importance of shrinking the central bank’s massive balance sheet before proceeding further with tightening the monetary policy.
The statement, which is due to be released at 18:00 GMT today, is expected to contain hints of near term monetary policy. Analysts expect that Federal Reserve Chairwoman Janet Yellen and other policymakers on the board may signal that they plan one more interest rate hike in the current year.
Hinting another interest rate increase would reflect the Federal Reserve’s confidence in the health of the US economy, despite recent lackluster economic data that raised investors’ concerns.
EUR/USD traded at 1.1629 as of 16:30 GMT on Wednesday from 1.1618 at 08:35 GMT, the pair’s lowest level since July 20. EUR/USD began trading today at 1.1635.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, rose to 94.20 as of 14:28 GMT today from 94.05 yesterday.

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