Dollar holds steady ahead of Fed rate decision

The US dollar was flat against major currencies on Wednesday ahead of the Federal Reserve’s interest rate decision, while the New Zealand dollar fell sharply ​after the country’s central bank surprisingly left interest rates unchanged.

Traders expect the Fed to leave monetary policy unchanged but they see a ‌78% chance that the US central ‌bank could lift interest rates by at least 25 basis points in December, according to the CME Group’s FedWatch.

The euro was flat against the dollar at $1.1130, trading just above the May 2025 low it ​hit earlier this month.

Against the Japanese yen, the dollar was up 0.14% to 158.19 yen. 

“There’s a general consensus that the Fed will not change policy,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “But with (Fed chair Kevin) Warsh’s dislike for forward guidance, ​that means there’s not going to be a strong pushback against market expectations, which are solidly for a December rate hike.”

The dollar index, which measures the greenback’s ​strength against a basket of six other currencies, was flat at 102.37.

The 2-year note yield, which typically ​moves in step with Fed interest rate expectations, rose 3.73 basis points to 4.774%.

Meanwhile, British finance minister John Healey told parliament on Wednesday he would raise taxes on banks, gambling and income for savers and landlords while also tightening value-added tax rules for online marketplaces - such as Amazon (AMZN.O) - to fund the package. 

The pound was flat against the dollar at $1.33 and was down about 0.13% versus the euro.