Dollar Falls as Investors Look for Signals from Central Banks

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The dollar gave ground against the euro on Wednesday in a day of poor trading, as investors were hesitant to make big bets ahead of meetings of central banks next week, including the Federal Reserve and the European Central Bank.

Also, much of Asia is celebrating the Lunar New Year and as a result, most major currencies clung to known ranges.

“Trading ranges remain noticeably compressed ahead of central bank meetings next week,” said Karl Schamotta of Corpay.

The euro rose 0.06 percent to $1.0895, not far from the nine-month high of $1.0927 hit on Monday. The dollar was down 0.45 percent against its Japanese counterpart at 129.575 yen, after hitting a near eight-month low of 127.215 on Jan. 16.

Separately, the Australian dollar traded at more than five-month highs after better-than-expected inflation data reinforced the idea that the Reserve Bank of Australia will continue to raise interest rates. The currency was up 0.28 percent at $0.7065.

The New Zealand dollar fell 0.81 percent to $0.6455 after the country’s annual inflation of 7.2 percent in the fourth quarter fell below its central bank’s 7.5 percent forecast.

Sterling fell 0.1 percent against the dollar after British manufacturers unexpectedly lowered their prices in December, suggesting inflation may be easing ahead of next week’s Bank of England policy meeting.

The greenback improved against its Canadian counterpart after the Bank of Canada raised its rate by 25 basis points to 4.5%, its highest level in 15 years, and said it was likely to pause to assess the cumulative effect of previous hikes.

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