Traders will only have statement to read as Yellen isn't slated to speak
The U.S. dollar edged slightly higher on Wednesday, with investors largely expecting the Federal Reserve to say it remains on course to raise interest rates again this year and offered additional clarity on its intention to shrink its massive asset portfolio.
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The ICE U.S. Dollar Index , which tracks the greenback against a half-dozen other major rivals, was up 0.1% at 94.17. The index recently hit its lowest level on more than a year, and lost 1.4% last week.
The euro bought $1.1628 ahead of the decision, compared with $1.1649 late Tuesday in New York. The common currency has been on a strong uptrend throughout 2017, having risen more than 10% against the dollar thus far this year, nearing levels last seen in August 2015.
Against the yen , the dollar bought Yen111.88, compared with Yen111.89 late Tuesday.
But appetite for risk showed up against Switzerland's currency , with the buck up roughly 0.7%.
Ahead of the Fed statement, the greenback bought 95.91 Swiss francs, up from 95.25 Swiss francs late Tuesday. The Swiss currency tends to act as a haven asset against the greenback, but the Swiss National Bank lately hasn't struck the hawkish tones about policy heard from other central banks including the European Central Bank. The franc is up about 5.8% against the dollar this year.
The main focus of Wednesday's action, however, will be the Federal Open Market Committee's policy decision, due at 2 p.m. Eastern on Wednesday (http://www.marketwatch.com/story/no-retreat-fed-to-stick-to-plans-for-rate-hike-balance-sheet-selloff-this-year-2017-07-24). Fed Chairwoman Janet Yellen and her colleagues on the policy-setting board are expected to signal they plan one more rate increase in 2017--and that they anticipate starting to sell the central bank's $4.5 trillion in holdings of Treasurys and mortgage-related bonds this year.
Yellen isn't scheduled to hold a news conference after the Fed releases its statement.
"No change is expected today given the tone of the recent testimony by Fed Chief Janet Yellen on Capitol Hill and some of the concerns that have been expressed by a number of policy makers about the lack of inflation currently being seen in the U.S. economy," Michael Hewson, CMC Markets' chief market analyst wrote Wednesday.
"That being said given the U.S. dollar has slipped quite sharply, a rate increase now would probably be a good time to slip one in given recent declines," he said.
"That remains unlikely, but what is expected is for the Fed to furnish a bit more detail on the timing on whether it will look to start paring down the size of its balance sheet as we look towards the September meeting, though given the lack of a press conference this might be problematic in terms of communication," he added.
Matthew Weller, senior market analyst at Faraday Research, said if the Fed either announces or implies an imminent reduction in its balance sheet, the buck could rally toward its falling 50-day moving average, referring to a closely watched chart level.
However, a well-established downtrend suggests investors favor shorting into any near-term bounces in the dollar unless it is able to break meaningfully back above the 50-day average, Weller added.
More pairs: The pound fetched $1.3037, recovering from an intraday low of $1.3000 after U.K. gross domestic product for the second quarter expanded by 0.3%, meeting widely held expectations. Sterling bought $1.3026 late in the previous session.
(END) Dow Jones Newswires
July 26, 2017 10:19 ET (14:19 GMT)