Dollar Hovers Near Two-Decade High as Traders Mull Fed Meeting, Data
2022.07.26 10:45
By Scott Kanowsky
Investing.com — The dollar held largely firm below a two-decade high on Tuesday, as traders parse through a raft of earnings and data for clues about the direction of the economy ahead of a Federal Reserve interest rate decision this week.
As of 02:39 EST (0639 GMT), the dollar index – which measures the greenback against a basket of other major currencies – was trading marginally lower by 0.07% at 106.285. The dollar recently touched a 20-year high of 109.290 in mid-July.
Looming today is the start of the two-day Fed policy-setting meeting. The U.S. central bank is widely expected to hike by at least 75 basis points in a bid to tamp down red-hot inflation.
However, recent softening in economic data has led some traders to ponder whether the Fed may potentially step away from aggressive policy tightening to avoid damaging growth.
Also weighing on sentiment was a profit warning from retail giant Walmart (NYSE:WMT) late on Monday. The company said it has seen customers cutting back on discretionary spending.
Meanwhile, the euro ticked slightly higher against the dollar, up 0.06% to $1.0226. But the common currency still faces headwinds from fresh uncertainty around Russian gas supplies.
Gazprom (MCX:GAZP), the Russian state-backed energy firm, said on Monday that westward supplies through the Nord Stream 1 pipeline into Germany would fall to just 20% of capacity. The announcement came only days after the company had restored output to 40% of capacity as scheduled maintenance came to an end.
The British pound also made gains versus the dollar, rising 0.14% to $1.2058. Investors are mulling a Bank of England policy decision next week, with the central bank expected to raise borrowing costs by as much as 50 basis points.
The Australian dollar pulled back slightly after touching a one-month high against the dollar to trade at $0.6957. Key Australian inflation data is due out on Wednesday, and economists see headline consumer price growth zooming to its quickest pace in more than 30 years.
In cryptocurrencies, Bitcoin slumped by 3.75% to $21,085.1, as the digital coin pares back increases from last week.
