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US dollar weakens ahead of Fed rate decision
[NEW YORK] The US dollar extended losses against the euro and pound on Tuesday after disappointing US economic data helped cement expectations the Federal Reserve will leave interest rates unchanged the next day.
US durable goods orders rose much less than expected in March, adding further evidence of weakness in the manufacturing sector. Consumer confidence in April unexpectedly fell, according to the closely watched Conference Board survey.
The data came as the Federal Reserve opened a two-day monetary policy meeting. All eyes in the market were focused on the Fed's post-meeting statement, due at 1800 GMT Wednesday.
"While no change in rates is expected from the Fed tomorrow, its policy statement could help shed light on the outlook for borrowing costs over the months ahead," said Omer Esiner Commonwealth Foreign Exchange.
"In particular, investors want to see if the Fed acknowledges any improvement in domestic or international economic conditions, which could make a quarter-point rate hike in June more likely."
The dollar, which had weakened Monday, slipped 0.3 per cent to US$1.1298 per euro. The greenback, meanwhile, edged higher against the yen.
"With the US central bank likely on hold for the time being, and absent any strong signals with respect to the timing of the next interest rate increase, we continue to expect only moderate US dollar performance in the near term," said Eric Viloria, currency strategist at Wells Fargo Securities.