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Dollar slips lower ahead of Fed policy decision

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Shutterstock photo - - The dollar slipped lower against the other major currencies on Tuesday, as sentiment on the greenback became vulnerable as markets braced for the Federal Reserve's highly-anticipated policy decision this week.

USD/JPY held steady at 121.05.

Most investors expect the Fed to raise interest rates for the first time since June 2006 at its meeting due to end on Wednesday.

Higher interest rates would make the U.S. dollar more attractive to yield-seeking investors.

EUR/USD edged up 0.17% to 1.1013.

Earlier Tuesday, the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 5.7 points to 16.1 this month from November's reading of 10.4. Analysts had expected the index to rise by 4.6 points to 15.0 in December.

Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.15% at 1.5165 and with USD/CHF slipping 0.14% to 0.9838.

Sterling found support after the U.K. Office for National Statistics said the annual rate of consumer price inflation rose by 0.1% last month, in line with expectations and up from -0.1% in October.

Month-over-month, consumer price inflation was flat in November, compared to forecasts for a 0.1% decline and following a gain of 0.1% in the prior month.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.2% last month, matching forecasts and up from 1.1% in October.

The Australian dollar was steady, with AUD/USD at 0.7248, while NZD/USD advanced 0.61% to 0.6798.

The Reserve Bank of Australia said earlier, in the minutes of its December policy meeting, that the domestic economy is strengthening and noted that overal business conditions and the employment market looked healthy.

However, in its mid-year economic and fiscal outlook, Australia's Treasury said growth forecasts were downgraded to 2.5% in 2015/16 from a previous estimate of 2.75% in May and to 2.75% in 2016/17 from 3.25%.

The report also said that the country's debt and budget deficit will be higher than initially expected.

Meanwhile, USD/CAD fell 0.25% to trade at 1.3698, still close to Friday's 11-1/2 year highs of 1.3759.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.21% at 97.53. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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