- The dollar drifted lower against a basket of other major currencies on Wednesday, ahead of the Federal Open Market Committee’s announcement on monetary policy, due later in the trading day.

USD/JPY dipped 0.07% to 102.07, after rising as high as 102.31 earlier.

The dollar edged lower as market watchers waited for the Fed announce its latest monetary policy decision, followed by a press conference with Fed Chair Janet Yellen.

The Fed was expected to cut its asset purchase program by another $10 billion to $35 billion, and investors were also awaiting indications on the future path of interest rates and the Fed’s latest economic forecasts.

Data on Tuesday showed that U.S. consumer prices rose 0.4% from a month earlier in May, bringing the annual rate of inflation to 2.1%. It was the fastest monthly increase in inflation in more than a year, beating forecasts of 0.2%.

The uptick in inflation indicated that the economic recovery is deepening and boosted expectations for a more hawkish stance on monetary policy from the Fed.

Meanwhile, data on Wednesday showed that the U.S. current account deficit widened to $111.2 billion in the first quarter of this year, the largest in 18 months. Exports fell by 1.3% during the quarter, while imports rose by 1.5%.

The euro gained ground against the dollar, with EUR/USD rising 0.21% to 1.3573.

Elsewhere, GBP/USD eased 0.10% to 1.6944, off the five year peak of 1.7011 set on Monday, after the minutes of the Bank of England’s June tempered expectations for a U.K. rate hike.

The minutes said that while the case for a rate increase is becoming more balanced more slack still needs to be absorbed from the economy. The BoE’s monetary policy committee voted unanimously to leave interest rates on hold at their record low of 0.5%.

USD/CHF fell 0.24% to trade at 0.8972.

The Australian and New Zealand dollars pushed higher, with AUD/USD easing up 0.10% to 0.9345 and NZD/USD adding 0.18% to trade at 0.8673. USD/CAD edged up 0.10% to 1.0871.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% to 80.60 from 80.72 late Tuesday.

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