29th April 2015
The US dollar came under pressure ahead of the Federal Reserve meeting on Wednesday, and settled near a two-month low.
Recent softer-than-expected data suggests the US economy slowed somewhat in the first quarter of 2015, which has weighed on the dollar. Further pressure is also added by expectations of a delayed interest rate rise from the Fed.
The dollar index fell to its lowest since March 5th, and the greenback declined to a three-week low when compared to the euro.
The probability for a rate hike in June has steadily decreased during the first three months of 2015. Economic data over the first quarter was weaker than predicted, which has caused analysts to push back their rate hike expectations.
Economists now predict the Fed’s first rate increase since 2006 will take place in September rather than June. Rates have remained near zero since late 2008 in order to boost the economic recovery in the US.
However, the Fed remains stalwart in its view to raise rates. Wednesday’s meeting should reveal whether it adjusts to accommodate the market, or remains resolute.
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