Japanese Yen recovers on Tueasday as dollar faces expectations for an accommodative Fed and hit by concern over the U.S. economy.
The euro also profited from the weaker dollar, adding 0.2 percent to $1.1348.
Markets expect the Fed to strike a dovish tone when it meets, and bets on an interest rate cut have increased after weaker-than-expected manufacturing data on Friday.
The U.S. dollar has weakened 1.3% in the last 10 days. On Tuesday, it fell 0.2 percent to 96.415.
The broader theme for foreign exchange markets in recent days has been oil. Oil prices rose to new 2019 highs on Tuesday. Prices were supported by OPEC supply cuts and falling output from Iran and Venezuela because of U.S. sanctions.
START TRADINGForex – Japanese yen rose benefiting from a weak greenback
The foreign exchange market has traded in a narrow range this week as caution prevails among investors ahead of the Fed meeting. The Japanese yen, Monday’s worst performing major currency, has recovered.
The Australian dollar has gained the most from the U.S. dollar’s retreat. However it was hit by Reserve Bank of Australia minutes that expressed concern about the housing market.
The New Zealand and Canadian dollar are also performing well.
Volatility in foreign exchange markets is at its lowest in five years and analysts say recent decisions by the Fed and other major central banks is contributing.
Sterling gained, rising 0.4 percent to $1.3311. It had fallen overnight after the speaker of Britain’s parliament upended Prime Minister Theresa May’s Brexit plans by ruling that she had to change her twice-defeated deal before offering it for a third vote.
The Bank of England is expected to leave its interest rate outlook unchanged. This is mainly because of the uncertainty over Britain’s decision to leave the European Union.
Sources: Reuters, Investing, CNN money
PLEASE NOTE The information above is not investment advice.