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Dollar trims gains with Fed decision in focus

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Investing.com - The dollar trimmed gains against the other major currencies on Wednesday, as investors became more cautious ahead of the Federal Reserve's policy decision due later in the day.

Investors were hoping that the Fed's rate statement, due later Wednesday, will reveal more about policy plans for the second half of the year, with markets paying close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet.

Doubts over the Feds plans for a third rate hike this year have recently weighed on the greenback.

Investors also remained focused on the investigation into alleged links between U.S. President Donald Trump's administration and Russia in last year's election.

On Monday, Jared Kushner, Trump's son-in-law and a senior White House adviser, told Senate investigators he had met with Russian officials four times last year but said he did not collude with Moscow.

Investors fear the persistent political turmoil will derail the Trump administration's pro-growth economic agenda of tax cuts and infrastructure spending, which helped propel the dollar to 14-year peaks after the November election.

EUR/USD was little changed at 1.1639, off session lows of 1.1613.

Elsewhere, GBP/USD edged up 0.11% to 1.3040, erasing earlier losses, after the U.K. Office for National Statistics said gross domestic product rose by 0.3% in the three months to June, from 0.2% growth in the first three months of the year. Economists had forecast growth of 0.3%.

On a year-over-year basis the economy expanded by 1.7% from 2.0% in the first quarter, also in line with forecasts.

USD/JPY was little changed at 111.83, while USD/CHF climbed 0.60% to trade at 0.9581.

The Australian dollar remained weaker, with AUD/USD down 0.32% at 0.7911, while NZD/USD added 0.13% to 0.7428.

Earlier Wednesday, the Australian Bureau of Statistics said its consumer price index rose 0.2% in the second quarter, disappointing expectations for an increase of 0.4%.

Year-on-year, consumer prices increased by 1.9%, compared to expectations for a 2.2% climb.

At the same time. Statistics New Zealand said the trade surplus grew to NZ$242 million last month from a revised surplus of NZ$74 million in May. Analysts had expected the trade surplus to hit NZ$100 million in June.

Meanwhile, USD/CAD was almost unchanged at 1.2513, just off the previous session's 14-month low of 1.2481.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 93.95, off session highs of 94.12 and re-approaching Tuesday's 13-month trough of 93.46.

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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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