Dollar's Steady Performance Amid Global Central Bank Meetings

In Tokyo, the U.S. dollar remained steady against the yen and other major currencies on Wednesday as investors eagerly awaited the Federal Reserve's potential hawkish rate cut before the Bank of Japan and other central banks convene this week.

Fed's Anticipated Rate Cut

The Federal Reserve is widely expected to reduce interest rates by 25 basis points at the conclusion of its two-day policy meeting. Market probabilities, as per the CME's FedWatch tool, stand at a substantial 97 percent.

Focus on New Economic Projections

Attention will be directed towards the new economic projections for the upcoming year, particularly how much further Fed officials anticipate reducing rates in 2025. Given the robust inflation and activity data, the Fed might signal a slower pace, revising projections to indicate three cuts instead of the current four, as suggested by Tony Sycamore, market analyst at IG.

Impact of U.S. Economic Data and Policy Changes

Resilient U.S. economic data, including November's retail sales which exceeded expectations, and the potential impact of upcoming tariffs and tax cuts by the incoming Trump administration, are also being factored into the Fed's outlook.

Dollar's Index and Performance Against Other Currencies

The U.S. dollar index, measuring the greenback against six rivals, showed minimal change, down 0.04 percent at 106.89 after reaching its highest since November 26 at 107.18 on Monday. Against the yen, the dollar rose 0.12 percent to 153.65.

Global Central Bank Meetings and Currency Movements

Markets have significantly reduced bets on the Bank of Japan raising rates on Thursday, favoring a January hike instead. Meanwhile, the Bank of England is also expected to hold rates steady. Other central banks, such as Sweden's Riksbank and Norway's Norges Bank, are seen taking different approaches to rate adjustments.

Cryptocurrencies and Other Currencies

In the cryptocurrency market, Bitcoin fell 0.54 percent to $105,836.57 after hitting a high of $108,379.28 in the previous session. Other currencies, such as the Australian dollar and the kiwi, also showed varied performances against the greenback.