Dollar is stable ahead of Fed

The US dollar held steady on Wednesday ahead of the highly anticipated release of the Federal Reserve’s latest policy meeting, while the New Zealand dollar was boosted by a record interest rate hike to curb inflation.

The US dollar index, which measures the dollar’s performance against six major currencies, settled broadly at 107.1, after declining 0.65 percent the previous day after improved sentiment boosted demand for higher-risk currencies.

The dollar rose against all major currencies this year, supported by the US Central Bank raising interest rates at large rates to curb inflation, but the recent US inflation data, which came less than expected, stimulated investors’ expectations to raise interest rates at lower rates.

Investors will analyse the minutes of the Federal Reserve’s November meeting, scheduled to be published at 1900 GMT, for any clues about interest rate directions.

The New Zealand dollar rose 0.7%, close to a three-month high, after the country’s central bank announced a record rate hike of 75 basis points to 4.25%, despite warnings that the economy could stagnate for a year.

The euro rose 0.1 percent to $1.03090 after new data showed that the slowdown in business activity in the euro zone eased slightly in November.

The British pound settled at $1.18915.

In China, rising COVID-19 cases undermined hopes of reopening the world’s second-largest economy, casting a shadow over the markets.

With regard to cryptocurrencies, trading has witnessed volatility, and Bitcoin has been fluctuating between recording losses and gains. Bitcoin rose last 2 percent to $16,520.