The dollar remained under pressure on Wednesday as global markets awaited a widely expected Federal Reserve rate cut and clues on the path of future easing. Shares inched higher and gold scaled fresh records, reflecting investor caution ahead of the policy decision.
The euro held near a four-year high after Fed easing bets boosted demand in the previous session, while oil prices stayed firm following Ukrainian drone strikes on Russian refineries and ports. Hong Kong’s Hang Seng Index led Asian markets, jumping to a four-year high.
The Fed is expected to lower its benchmark rate by 25 basis points to the 4.00%-4.25% range. Market focus, however, is on Fed Chair Jerome Powell’s comments about the outlook for U.S. monetary policy.
“Markets are effectively daring the Fed to over-deliver on the dovish side,” said Dilin Wu, research strategist at Pepperstone. “The bigger question is whether Powell can meet those expectations—or spark a shakeout in both dollar and gold positioning.”
The dollar index (DXY) inched up 0.1% to 96.723 after Tuesday’s 0.7% drop, its lowest since early July. The euro (EURUSD) eased 0.1% to $1.1855 after touching $1.1867, its strongest since September 2021. Against the yen, the dollar was steady at 146.43 (USDJPY).
ANZ’s head of FX research Mahjabeen Zaman noted: “If Powell is more dovish than expected, the dollar could weaken further. But with more than five cuts already priced in, the market may be running out of room for bearish surprises.”
The Fed meeting comes just after Stephen Miran was sworn in as a new governor, while a U.S. appeals court blocked President Donald Trump from removing Governor Lisa Cook.
In equities, MSCI’s Asia-Pacific index outside Japan rose 0.2%, set for a ninth-straight gain. Japan’s Nikkei slipped 0.1% after a record close, while Hong Kong’s Hang Seng surged 1.4% on optimism over a potential U.S. deal to keep TikTok operating.
European stock futures were firmer: Euro Stoxx 50 up 0.32%, DAX up 0.36%, and FTSE up 0.11%. U.S. S&P 500 e-minis were flat after a soft Wall Street session.
Elsewhere, the Bank of Canada is also expected to cut rates Wednesday to address slowing growth and trade strains. Japan’s latest trade data showed exports falling for a fourth straight month, underscoring global tariff pressures.
Oil prices steadied after recent gains. U.S. crude (CL1!) dipped 0.1% to $64.45 a barrel. Russia’s pipeline operator Transneft warned output cuts may follow after drone strikes on key infrastructure.
Gold (GOLD) rose 0.2% to $3,683.29 an ounce, after topping $3,700 for the first time on Tuesday.
In crypto markets, bitcoin (BTCUSD) slipped 0.2% to $116,687.18, while ether (ETHUSD) edged down 0.18% to $4,490.76.
