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Dollar Mixed Ahead Of Fed Announcement

USD JPY2 103117

The dollar is turning in a mixed performance against its major rivals Tuesday afternoon. The buck is gaining ground against the Japanese Yen after the Bank of Japan lowered its inflation outlook, but is down against the British pound ahead of Thursday's policy decision from the Bank of England.

The Federal Reserve will conclude its 2-day policy meeting Wednesday afternoon. The Fed is widely expected to keep interest rates unchanged, but traders will keep a close eye on the accompanying statement.

Additionally, President Donald Trump plans to announce his nominee for the next Fed Chair on Thursday. Multiple media sources have reported that Trump intends to nominate Fed Governor Jerome Powell to replace current Fed Chair Janet Yellen.

Growth in Chicago-area business activity unexpectedly accelerated in the month of October, according to a report released by MNI Indicators on Tuesday.

MNI Indicators said its Chicago business barometer rose to 66.2 in October from 65.2 in September, with a reading above 50 indicating growth. The increase surprised economists, who had expected the barometer to drop to 61.0.

Consumer confidence in the U.S. saw a significant improvement in the month of October, the Conference Board revealed in a report released on Tuesday.

The Conference Board said its consumer confidence index jumped to 125.9 in October from an upwardly revised 120.6 in September. Economists had expected the index to inch up to 121.0 from the 119.8 originally reported for the previous month.

The dollar reached an early high of $1.1621 against the Euro Tuesday, but has since slipped to around $1.1650.

The euro area economy expanded at a faster than expected pace in the third quarter and the unemployment rate fell to a more than eight-year low, while inflation slowed unexpectedly, official data revealed Tuesday.

Gross domestic product climbed 0.6 percent quarter-on-quarter, but the rate was slightly slower than the revised 0.7 percent expansion seen in the second quarter, preliminary flash estimate published by Eurostat showed.

Economists had forecast the sequential growth rate to ease to 0.5 percent from the second quarter's initial estimate of 0.6 percent.

Eurozone inflation eased unexpectedly in October, though marginally, flash data from Eurostat showed Tuesday. Inflation slowed to 1.4 percent in October from 1.5 percent in September. Economists had expected the inflation to remain stable at 1.5 percent.

The euro area unemployment rate reached its lowest level since January 2009, data from Eurostat showed Tuesday. The jobless rate fell to 8.9 percent in September from 9 percent in August. This was the lowest since January 2009. The rate was forecast to remain at 9 percent.

France's economy expanded as expected in the third quarter, first estimate from the statistical office Insee revealed Tuesday. Gross domestic product grew 0.5 percent sequentially, in line with expectations, but slightly slower than the revised 0.6 percent expansion posted in the second quarter.

France's inflation increased in October on higher food prices, provisional estimate from the statistical office Insee showed Tuesday. Consumer price inflation rose to 1.1 percent in October from 1 percent in September. Inflation was forecast to remain unchanged at 1 percent. Final data is due on November 15.

France's consumer spending increased in September after falling in the previous month, figures from the statistical office INSEE showed Tuesday. Consumer spending rose 0.9 percent month-over-month in September, reversing a 0.2 percent drop in August.

The buck has dropped to around $1.3275 against the pound sterling this afternoon, from a high of $1.3190 this morning.

UK consumer confidence weakened in October on concerns about wider economic prospects but willingness to buy improved for the third straight month, survey data from GfK showed Tuesday. The consumer sentiment index fell by one point to -10 in October.

The Bank of Japan kept its monetary stimulus unchanged, on Tuesday, despite lowering its inflation outlook.

Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion, the bank said in a statement.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

The board also decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

Inflation forecast for the fiscal 2017 was lowered to 0.8 percent from 1.1 percent and the projection for 2018 to 1.4 percent from 1.5 percent. Nonetheless, the outlook for the fiscal 2019 was maintained at 2.3 percent.

The greenback slipped to an early low of Y112.948 against the Japanese Yen Tuesday, but has since rebounded to around Y113.700.

Japan's industrial production declined at a slower-than-expected pace in September, preliminary figures from the Ministry of Economy, Trade and Industry said on Tuesday.

Industrial production dropped a seasonally adjusted 1.1 percent month-over-month in September, reversing a 2.0 percent rise in August. That was below the 1.6 percent decrease expected by economists.

Japan's housing starts dropped for the third straight month in September, data from the Ministry of Land, Infrastructure, Transport and Tourism showed Tuesday. Housing starts declined 2.9 percent year-on-year in September, bigger than August's 2 percent decrease but smaller than the expected fall of 3.2 percent.

Japan's unemployment rate held steady for the third straight month in September, in line with expectations, data from the Ministry of Internal Affairs and Communications showed Tuesday. The jobless rate came in at 2.8 percent in September, the same rate as in August.

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