Dollar Supported by High Swap Rate Ahead of Fed Decision
By
Renae Dyer, Dow Jones Newswires
The dollar was rising as it continued to buck seasonal weakness due to a high short-term swap rate, ING analyst Francesco Pesole said in a note.
The Federal Reserve is widely expected to cut interest rates by 25 basis points on Wednesday but it’s likely to signal that future cuts will be cautious, as markets anticipate, he said.
Unless the Fed signals more cuts than market pricing implies, the two-year dollar overnight index swap rate around 4.0% should prevent the dollar from correcting meaningfully lower in a usually soft month for the currency, Pesole said.
