The US Dollar Index held steady around the 102.4 level during Wednesday’s (October 28) trading session, following gains for three consecutive days. The dollar’s strength is underpinned by investor caution ahead of the Federal Reserve’s policy decision, which remains the primary focus for the market.
The Fed is widely expected to keep interest rates unchanged at this meeting. Nevertheless, market participants will be closely scrutinizing the central bank’s statement for clues regarding a potential rate hike in December—particularly as persistent inflationary pressures remain a concern.
On the economic front, investors are also awaiting earnings reports from Alphabet and Microsoft, due after the Wall Street close. The performance of both companies will serve as a key indicator of the strength of demand for artificial intelligence, which has contributed to investment and economic growth in the US.
The dollar also strengthened by more than 1% against the New Zealand dollar after the Reserve Bank of New Zealand unexpectedly kept its benchmark interest rate on hold—a move that diverged from market expectations, which had anticipated a 25-basis-point hike.
Beyond the Fed, the market is also awaiting policy decisions from the Bank of Canada, the European Central Bank, and the Bank of Japan. However, the short-term trajectory of the dollar is expected to remain heavily dependent on the tone of the Fed’s policy stance and any signals regarding the likelihood of a rate hike before the end of the year.