On June 16 (New York time), according to Reuters, the USD slightly decreased as investors awaited the first policy decision of the US Federal Reserve (Fed) under the leadership of new Chairman Kevin Warsh.
Market sentiment improved after information about a temporary peace agreement between the US and Iran, reducing the demand to hold the USD as a safe haven asset.
In the Asian trading session, the money market became quiet as investors limited large bets on the outcome of the Fed meeting.
The euro stabilized at 1.1611 USD per 1 euro, while the British pound remained almost unchanged, trading around 1.3430 USD. The New Zealand dollar rose slightly to 0.5833 USD.
Most markets predict that the Fed will keep interest rates unchanged in the first meeting under Mr. Kevin Warsh. However, investors are particularly interested in policy statements, economic forecasts and subsequent press conferences to look for signals about the direction of US monetary policy in the near future.
Mr. Erik Weisman, chief economist at MFS Investment Management, believes that the Fed may send a neutral message on monetary policy.
According to him, Chairman Kevin Warsh is likely to be cautious in the early stages and seek consensus within the Fed before making significant changes.
The USD index, measuring the strength of the greenback against major currencies, slightly fell to 99.53 points, after previously rising thanks to safe-haven demand amid Middle East tensions.
Meanwhile, the Japanese Yen traded at 160.43 yen per USD, continuing in the area where the market is concerned that the Japanese government may intervene to support the domestic currency.
On June 16, the Bank of Japan (BOJ) raised interest rates to the highest level in 31 years, marking a major step forward in the process of normalizing monetary policy after many years of maintaining extremely low interest rates.
However, the BOJ has not given a clear signal on when to continue raising interest rates in the future.
According to Ms. Jane Foley, senior foreign exchange strategist at Rabobank, although the BOJ's decision to raise interest rates is of great significance, market attention is currently still more focused on the Fed.
In another development, the Australian dollar is almost flat at 0.7066 USD. Previously, the Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35%, while warning that there is still a possibility of further interest rate hikes if inflation is not fully controlled.
