The dollar drifts as the Fed gears up

The dollar is hovering as the Federal Reserve gets ready for its two-day meeting.

The US dollar index is up by 0.2% at 101.58 as of 7:26 a.m. ET.

On Tuesday, the Federal Reserve will begin its two-day meeting. Markets have priced in a 100% probability of a 25 basis point rate hike, according to Bloomberg World Interest Rate Probability data.

Traders will be keeping their eyes on the Fed’s dot plot.

Separately, regarding US economic data, PPI will be released at 8:30 a.m. ET.

As for the rest of the world, here’s the scoreboard as of 7:28 a.m. ET:

  • The British pound is down by 0.7% at 1.2132 against the dollar after UK parliament passed the so-called Brexit bill without any amendments on Monday night. This paves the way for prime minister Theresa May to trigger Article 50 at some point this month. The pound’s dip on Tuesday “suggests that the reality of the UK’s divorce from Europe and two years of horse-trading to agree trade deals is beginning to spook the FX market,” Kathleen Brooks of City Index writes in her Tuesday morning email.
  • The Russian ruble is down by 0.5% at 59.1016 per dollar, while Brent crude oil, the international benchmark, is up by 0.7% at $US51.70 per barrel. On Monday, a BMI Research team argued in a note to clients that the ruble “is set for a period of short-term weakness due to falling oil prices and waning optimism over the prospect of warming US-Russia relations. That said, high and rising real interest rates in Russia will limit the impact of oil price volatility on the unit, and we expect the ruble to outperform Brent.”
  • The euro is down by 0.2% at 1.0634 against the dollar. Earlier, the German ZEW economic sentiment index came in at 12.8 for March, below expectations of 13.1, but above the prior reading of 10.4. As for the eurozone’s ZEW economic sentiment, it clocked in at 25.6, above expectations of 19.3, and above the prior reading of 17.1.
  • The Japanese yen is little changed at 114.96 per dollar.

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