Dollar Steady as Traders Anticipate Fed Rate Decisions

The dollar remained steady as traders awaited interest rate decisions from the Federal Reserve, amidst speculation of gradual rate cuts next year. The euro depreciated as U.S.-German yield differentials expanded. Meanwhile, global markets are eyeing announcements from BoJ, BoE, and Riksbank influencing currency dynamics.

The dollar held its ground on Tuesday, maintaining stability as traders anticipate the Federal Reserve's upcoming interest rate decisions. The financial community is largely expecting a rate cut, but speculations suggest these reductions will occur at a gradual pace next year.

Significantly, the euro has weakened by nearly five percent against the dollar this year, pressured by the wide gap—currently 216 basis points—between U.S. and German 10-year yields. The Fed is poised to announce its decision on interest rates on Wednesday, with futures markets indicating a 94% probability of a cut.

The anticipation extends globally, with monetary policy decisions also expected this week from the Bank of Japan, Bank of England, and Norway's Norges Bank who are likely to hold rates steady. Meanwhile, the British pound rallied slightly amid data showing higher than anticipated UK wage growth.

(With inputs from agencies.)