The U.S. dollar temporarily paused its ascent but remained near a one-month high, trading at 101.27 after easing 0.15%. This came as traders awaited the Federal Reserve's interest rate decision. Markets had priced in a roughly 30% chance of a 25-basis-point hike, with some strategists, like Frank Flight of Citadel Securities, suggesting a hike was likely due to a hawkish shift at the Fed and moderate energy price increases.
The Australian dollar fell 0.28% to $0.6954 after slower inflation data in the June quarter reduced the likelihood of further rate hikes from the Reserve Bank of Australia. Conversely, the Japanese yen strengthened 0.3% to 163.38 per dollar, though it stayed near a 40-year low, prompting monitoring for potential intervention from Japanese authorities. The New Zealand dollar improved slightly by 0.06% to $0.5791, and the euro edged up 0.14% to $1.1401, recovering from a one-month low.
Despite the Fed's decision to hold rates, strategists at OCBC and SMBC anticipated a possible further strengthening of the dollar, potentially pushing USD/JPY to 164, if the Fed provided hawkish guidance. The rupee also strengthened, rising 11 paise to 95.88 against the U.S. dollar, supported by lower crude oil prices and cooling geopolitical tensions, marking its third consecutive session of gains. Brent crude fell 1.98% to $86.61 a barrel and WTI declined 1.89% to $81.05.
