NEW YORK (Reuters) – The dollar edged lower against a basket of major currencies on Wednesday as oil declined and investors awaited the Federal Reserve’s statement for clues on whether bets on a single U.S. interest rate rise in 2016 are justified.
Fed fund futures are implying markets expect just one rate hike this year, compared with four according to Fed policymakers’ guidance. That has put the main focus on what the Fed says at 2 p.m. EST (1900 GMT) after a two-day policy review that started Tuesday.
A more aggressive path of rate increases would boost U.S. short-term rates, which would likely help the dollar against lower-yielding currencies such as the yen or euro.
While the U.S. central bank is almost certain to keep rates unchanged, investors are anticipating its policy statement, particularly given markets’ turbulent start to the year.
The dollar index fell 0.26 percent to 99.101, trudging further below a seven-week high of 99.799 set last Thursday.