Forex – Dollar Remains Lower Before Fed Decision

© Reuters. Dollar remains lower before Fed decision – The dollar remained weaker on Wednesday, losing ground against a basket of the other major currencies ahead of the Federal Reserve’s policy decision later in the day.

The , which measures the greenback’s strength against a basket of six major currencies, was down 0.39% to 88.68 by 10:29 AM ET (15:29 GMT), not far from last week’s low of 88.25, its weakest level since December 2014.

The dollar was on track for a steep monthly loss against its peers, with the index down around 3.0% on the month at time of writing.

The dollar has come under pressure as it has lost its relative yield attraction for investors. A faster rate of monetary tightening outside the U.S. would lessen the divergence between the Federal Reserve and other central banks.

The dollar showed limited reaction to U.S. President Donald Trump’s State of the Union speech, in which he urged Congress to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending.

Investors remained cautious ahead of a slate of events this week, including the that ends later on Wednesday and Friday’s U.S. employment report for January.

While the Fed was not expected to make any changes to monetary policy, the meeting was the last time Janet Yellen would serve as Fed chair before the role is taken over by Jerome Powell.

The dollar shrugged off data showing that the U.S. private sector added , pointing to sustained strength in the labor market. Another report showed that labor costs rose solidly in the fourth quarter.

Separate reports showed that rose for a third consecutive month in December, while manufacturing activity in the Chicago region cooled in January, albeit at a slower than expected pace.

The euro was up almost half a cent, with rising 0.48% to 1.2461, moving back in the direction of the more than three year peaks of 1.2537 reached last week.

Demand for the euro continued to be underpinned after for January underlined expectations that the European Central Bank will soon begin to scale back its monetary stimulus measures.

The single currency has risen around 3.5% against the dollar so far in January.

The dollar was a touch higher against the yen, with edging up 0.12% to 108.90, holding above last Friday’s four-and-a-half month low of 108.27.

Sterling pushed higher, with rising 0.28% to 1.4185.

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