TODAY'S FOREX: THE US DOLLAR IS FLUCTUATING AHEAD OF THE FOMC

Today is FOMC day, and it's going to be busy. New Zealand will present Q2 current account data and Japan will present August trade data during the Asian session. The Australian Westpac Leading Index will also be made public. The People's Bank of China (PBoC) interest rate decision will be the main topic of discussion. The UK will present August inflation statistics later today, and Germany will present wholesale inflation data. The Federal Reserve will make its monetary policy announcement during the American session.

WHAT YOU SHOULD BE AWARE OF ON WEDNESDAY, SEPTEMBER 20 IS AS FOLLOWS:

The People's Bank of China's interest rate decision will be a significant event during the Asian session. After being lowered last month, the prime rate for 1-year loans is anticipated to stay at 3.45%.

The Federal Reserve's choices on Wednesday will be the main event. Market participants anticipate that the central bank will maintain the Fed Fund rate at 5.25–5.50%. The statement, the economic forecasts, and Powell's press conference will be the main topics of discussion.

Data made public on Tuesday revealed contradictory results from the US home market. Building Permits up 6.9% in August while Housing Starts fell 11.3%.

The US Dollar Index increased during the American session in response to worsening market mood and rising US Treasury yields. The DXY bounced back to 104.80 and went beyond 105.00.

The EUR/USD pair retreated after failing to hold above 1.0700, a downward channel. The final reading of the Harmonized Index of Consumer Prices for the Eurozone for August decreased from 5.3% to 5.2% annually. On Wednesday, Germany will announce its August Producer Price Index, with a drop from -6% to -12.8% predicted.

Despite reaching its best daily close since November, the USD/JPY rate is still below 148.00. On Wednesday, Japan will present its August trade statistics. Reaching intraday monthly highs, but it is still below 0.9000. The Autumn 2023 Economic Forecasts report for Economic Affairs (SECO) will be made public. The Swiss National Bank is anticipated to announce a rate increase of 25 basis points to 2% on Thursday.

GBP/USD retreated after failing to hold above 1.2400 and continued to trade close to monthly lows. On Wednesday, the UK's August inflation data is due. It is anticipated that the annual Consumer Price Index rate will increase from 6.8% to 7.1%. Such a figure might increase the likelihood that the Bank of England, which will make its decision on Thursday, would increase interest rates.

In Canada, the consumer price index increased by 0.4% in August, exceeding the 0.2% market expectation. Annual growth increased from 3.3% to 4%. After the announcement, the Canadian Dollar (CAD) reached a peak before declining. While losing momentum and falling to monthly lows at 1.3380, USD/CAD ultimately finished well above the bottom at 1.3440.

Regarding Canadian inflation, TD Securities:

The Bank of Canada will be more concerned about ongoing pricing pressures as a result of today's report, which shows that the Q3 CPI is tracking significantly above expectations from the July MPR. A lower GDP outlook may enable the Bank to look past some of this tenacity, and there will still be one more inflation report before the October BoC meeting, but today's report should help reiterate that the mission has not yet been completed and that future meetings are still open to another raise.

The 20-day Simple Moving Average of NZD/USD was broken, and the currency pair achieved a daily close above 0.5900. The short-term bias of the current indicators is somewhat upward. Along with Q2 GDP statistics, New Zealand's Q2 current account data is due on Thursday.

The AUD/USD currency pair tried to break through resistance at 0.6470 but was unsuccessful. Ahead of the Asian session, it still has a largely optimistic bias. On Wednesday, the Westpac Leading Index is expected.

Due to a stronger US Dollar throughout the American session, precious metals lost their gains. Gold fell to $1,930 while Silver retreated to $23.20.