Dollar Wavers as Fed Meeting Begins

By Chelsey Dulaney Features Dow Jones Newswires

The dollar wavered Tuesday as the Federal Reserve began its latest policy meeting.

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The WSJ Dollar Index, which measures the U.S. currency against 16 others, was down 0.2% to 88.31.

The Fed is widely expected to raise its benchmark interest-rate by a quarter percentage when it concludes its meeting Wednesday.

Investors will focus on the Fed's statement and post-meeting press conference, which could offer clues on the central bank's plans for future rate-increases and shrinking its balance sheet.

"We expect a "dovish hike" -- raising rates but signaling a pause perhaps until year-end -- to weigh further on the U.S. dollar," said analysts at Scotiabank in a research note.

Recent weakness in U.S. inflation data has raised concerns that the U.S. economy is slowing, which some investors believe dulls the Fed's case for tightening policy. Higher rates typically support the dollar by making U.S. assets more attractive to yield-seeking investors.

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The Bank of England, Bank of Japan and Swiss National Bank also hold policy meetings this week.

The British pound recovered from a three-day selloff, rising 0.7% against the dollar, after data showed U.K. inflation rose in May. The British currency has tumbled since Prime Minister Theresa May's Conservative Party lost its majority in last Thursday's election, fueling uncertainty over the path of U.K. politics and its looming Brexit negotiations.

The Canadian dollar jumped 0.6% against the U.S. currency after upbeat comments from central bank officials fueled speculation that the Bank of Canada could raise interest rates.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

June 13, 2017 17:02 ET (21:02 GMT)