The dollar edged higher on Wednesday, rising from a 13-month low hit in the previous session as investors trimmed some short bets before a Federal Reserve policy decision.
Markets have reduced expectations for a U.S. interest rate increase in the coming months with expectations of another rate hike at less than 50 percent before the end of the year.
If there is no change in the language of the statement, we can expect a mild dollar rally and there would be a better opportunity for the Fed to communicate its policy expectations
The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.
The Fed recently signaled it would begin to trim its balance sheet this year. Yellen said earlier this month that process could begin relatively soon.
But a slowdown in inflation this year has caused jitters among some Fed officials who are already concerned that inflation has been below the central bank's 2 percent target for five years.
Markets have reduced expectations for a U.S. interest rate increase in the coming months with expectations of another rate hike at less than 50 percent before the end of the year.
If there is no change in the language of the statement, we can expect a mild dollar rally and there would be a better opportunity for the Fed to communicate its policy expectations
The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.
The Fed recently signaled it would begin to trim its balance sheet this year. Yellen said earlier this month that process could begin relatively soon.
But a slowdown in inflation this year has caused jitters among some Fed officials who are already concerned that inflation has been below the central bank's 2 percent target for five years.
