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Title: Dollar Up, Investors Await Fed Policy Decision

May 04, 2022 12:54AM ET

By: AnalysisWatch

The dollar strengthened in Asia on Wednesday morning, but the moves were small as investors awaited the Federal Reserve's latest decision.

The U.S. dollar index, which tracks the greenback against a basket of other currencies, was up 0.05% to 103.28 by 12:44 p.m. EDT.

The USD/JPY pair rose 0.02% to 130.12, with the yen hovering just above a 20-year low versus the dollar hit the previous week.

Japanese markets stayed shut for the holiday.

The AUD/USD currency pair rose 0.25% to 0.7111 after Australia published retail sales data for March 2022 earlier in the day.

The NZD/USD currency pair rose 0.05% to 0.6440 after data published earlier in the day indicated that employment increased 0.1% quarter-on-quarter in the first quarter of 2022, while the unemployment rate stood at 3.2%.

The USD/CNY currency pair remained unchanged at 6.6083. Chinese markets also stayed off due to the holiday. The GBP/USD currency pair decreased by 0.08% to 1.2488.

The US Federal Reserve will announce its latest monetary policy decision later today, in which it is expected to aggressively raise interest rates by 50 basis points. The central bank is also expected to unveil plans to reduce its balance sheet.

However, some investors are skeptical that the monetary policy decision will be a big boost for the dollar.

The euro resumed its sluggish recovery after dropping to $1.0470 the prior week, its weakest level since January 2017.

In the Asia-Pacific region, the ongoing COVID-19 closure in China remains a source of worry for economic expansion. In Shanghai, some people managed to go for brief walks and shopping after enduring the closure for more than a month. Meanwhile, in the capital Beijing, a mass testing program continues.

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