FX.co ★ Dollar Languishes Ahead of Fed Decision

The dollar index was steady at around 96.7 on Wednesday, staying around its lowest level in two and a half months, and showing a decline of about 1% for the week so far, as investors prepared for the upcoming monetary policy announcement by the Federal Reserve. It is widely anticipated that the Fed will implement a quarter-point interest rate reduction later today, with markets predicting approximately 67 basis points of total easing by the end of the year. These expectations are supported by data indicating a weakening labor market, despite inflation remaining above the Fed's 2% target. Investors will also closely examine the Fed's quarterly "dot plot" projections for insights into future rate decisions. On the economic data side, US retail sales experienced growth for the third consecutive month in August, reflecting broad gains and highlighting the strength of consumer spending over the summer. Consequently, the dollar declined against major currencies, reaching a four-year low against the euro.