Dollar steady ahead of Fed decision, kiwi slumps after RBNZ holds

– The U.S. dollar was steady at a two-week high on Wednesday ahead of central bank policy decisions, with the Federal Reserve widely expected to maintain its policy interest rate unchanged but signal the likelihood of any December rise.

Most dollar counterparts were flat ahead of the Fed decision. The euro was barely changed at $1.1129 and the British pound was also barely changed at $1.3307. The dollar last traded 0.1% weaker at 157.81 yen, having swung between gains and losses.

The kiwi dollar fell as much as 1.7% to $0.5585 as the Reserve Bank of New Zealand surprised the market by keeping rates at 2.75%. A Reuters poll found 22 out of 27 experts expected the central bank to boost rates.“The market just got that wrong,” said Mike Houlahan, a director at Electus Financial Ltd in Auckland. “Only 10 days left until the election,” he said. “It’s good manners not to get involved in politics.”

The Australian dollar was 0.1% firmer at $0.7035 after inflation figures of 1.3% in the third quarter of the year, after 0.6% the previous quarter. The trimmed mean measure of core inflation came in at 1% as expected by the market, putting the annualised rate at an above-target 3.6%.

Governor Michele Bullock told lawmakers on Wednesday that the Reserve Bank of Australia will debate whether four rate rises this year will be adequate to return inflation to goal at a policy meeting next week.

For US traders, mostly looking for no change in central bank policy. The CME Group’s FedWatch tool indicated fed funds ​futures are pricing ⁠a 91% chance the Federal Open Market Committee would maintain its policy interest rate on hold.”The Fed doesn’t have to hike today to move markets,” said Chris Weston, chief research officer at Pepperstone Group in Melbourne. It just needs to alter the estimated probability of trekking in December.

The US dollar index, which measures the greenback against six currencies, climbed 0.3% to 102.40, its best since October 14. The yield on the US 10-year Treasury note was flat at 4.9967%.

In the cryptocurrency market bitcoin was unchanged at $80,736.07 while ether edged up 0.1% to $2,345.25.