Dollar Steadies before the FOMC and ECB

The U.S. dollar and Japanese yen enjoyed safe haven inflows during the Asian trade session on Tuesday.

Traders are concerned about a looming tariff deadline, scheduled for December 15 and focusing on key monetary policy and rate decisions from the U.S. Federal Reserve and European Central Bank.

There is also the general election scheduled for Thursday in the United Kingdom.

The Australian and New Zealand dollars, sentiment and commodity linked currencies also gained ground during the Asian and Pacific Rim trade session.

The USD/JPY currency exchange rate was trading steady at 108.56 yen. The EUR/USD currency exchange rate was trading at 10.1064.

In a basket against six other Forex units, the U.S. currency was trading at 97.644.

Central Bank Monetary Policy Decisions and Trade Commentary Boost the Dollar

Forex traders are worried that the United States will apply new tariffs at the December 15 deadline against goods from China.

Over the weekend, White House economic adviser Larry Kudlow said that the December 15 deadline is still in place. However, he also said that President Trump was happy with trade talk progress.

Also, U.S.  Agriculture Secretary Sonny Perdue said that the tariffs are “unlikely to take effect.”

On Wednesday, the Federal Open Market Committee (FOMC) will announce their December monetary policy and Fed Funds Rate (FFR) decision.

The FOMC is most likely to keep their FFR at 1.75 percent. They will also keep to their wait and see approach towards future monetary policy and rate decisions, for now. Their economic outlook, Fed dot plot will be closely watched.

On Thursday, the European Central Bank (ECB) will announce their rate and monetary policy decision for December. This is the first rate decision under Christine Lagarde. The ECB is also likely to stick to the sidelines.

However, Lagarde’s commentary will make her mark on future monetary policy under her four year term as ECB President.