Dollar falls ahead of Fed decisions, US retail sales data

The US dollar fell on Wednesday, to resume its losses after taking a breather yesterday, as demand for the US currency slowed due to negative expectations for the US Fed, which comes ahead of the US retail sales reading for August, and the Federal Reserve's monetary policy decisions.

The dollar index fell 0.3% to 92.81 points, after opening at 93.08, and hit an intraday-high of 93.19.

The index gained less than 0.1% yesterday, posting its first gain in the last 3 days.

Demand slowed down for the US currency as the best alternative investment due to improved market sentiment and investors focusing on high risk currencies.

This came while concerns eased about a liquidity drain in markets, especially after tech stocks rebounded in Wall Street, and most other global stock markets rallied.

The greenback also came under pressure of growing bets that the Fed will announce extra monetary stimulus to support the US economy from further damages by the coronavirus crisis.

Investors are anticipating the release of the US retail sales, which is one of the most important gauges of consumer spending that accounts for 70% of the US GDP, and delivers key insight on the US economy's recovery from the coronavirus effects.

The monthly retail sales reading will be released at 12:30 GMT, with forecasts for a rise by 1.1% in August vs. 1.2% in July, and the core reading for the same index (excluding car sales) is expected to also rise by 1% vs. 1.9%.

The US monetary policy statement and interest rate decision will be unveiled at 18:00 GMT, amid expectations for the Fed to maintain rates unchanged at 0.25% and Fed Chairman Jerome Powell will deliver a speech at 18:30 GMT.

Investors are in search of cues and insight over the future of the Fed's stimulus plans, as it will be the first appearance of Fed Chair Jerome Powell since he unveiled the US monetary policy historic shift at the Jackson Hole Economic Symposium that is aimed at allowing inflation to run above the Fed’s previous target to support the economic recovery from the coronavirus impact.