The dollar eased on Wednesday ahead of the Federal Reserve’s first policy decision under Chair Kevin Warsh, with lingering optimism over an interim U.S.-Iran peace deal underpinning risk appetite and dampening demand for the U.S. currency.

Federal Reserve Decision

The Fed is widely expected to stand pat on rates at Warsh’s debut meeting. The statement, economic projections and news conference, however, will be scrutinised for any signals of the Fed dropping its easing bias as officials grow more hawkish on inflation risks.

According to Erik Weisman, chief economist and portfolio manager at MFS Investment Management, ‘The Fed is likely to signal a neutral bias for monetary policy going forward.’ Weisman added that Warsh ‘will face a barrage of questions about how he expects to steer the Fed in the direction he has indicated over the years.’

Currency Market

Moves in currencies were largely subdued in the early Asian session, with investors hesitant to take on large positions ahead of the Fed’s rate outcome later in the day. The euro steadied at $1.1611 while sterling was little changed at $1.3430.

Against a basket of currencies, the dollar eased slightly to 99.53, unwinding some of its safe-haven gains made as details emerged of the U.S. and Iran’s interim agreement to end the war in the Middle East.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.