18.09.201306:41:47UTC+00U.S. Dollar trades near 3-week low against Euro before fed finalize meeting

The dollar held near the worst position in three weeks versus the euro before the Federal Reserve finalize a two-day meeting today when policy makers will decide whether to trim the pace of its $85 billion of monthly asset purchases.

The Federal Open Market Committee will cut down Treasury purchases to $40 billion, while maintaining to purchase $40 billion of mortgage backed securities, according to the median estimate of economists surveyed by Bloomberg News. The Bloomberg U.S. Dollar Index was 0.1 percent from a five week-low. The pound held a two-day drop versus the euro before the Bank of England releases minutes today of its last meeting.

Fed Nominee

Fed policy makers have pledged to keep the benchmark interest rate near zero at least as long as unemployment exceeds 6.5 percent and the outlook for inflation is no more than 2.5 percent. The central bank will release its 2016 economic projections today, including the outlook for the benchmark rate.

Worst Mover

The dollar has slumped 0.5 percent in the past week, the largest retreat among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro backslide 0.2 percent in the same period while the yen advanced 0.2 percent. New Zealand’s kiwi jumped 1.3 percent, the best performer.

Milk Prices

Milk powder for delivery across all contracts through March soared 1.1 percent, according to a trade-weighted index posted on Fonterra’s GlobalDairyTrade website. The average winning price was $5,096 a metric ton. Prices hike to $5,124 on Aug. 20.

“We are broadly constructive on the New Zealand dollar,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Generally, the economy is still outperforming, commodity prices are very high.”

New Zealand’s dollar declined 0.2 percent to 82.22 U.S. cents from yesterday, when it reached 82.49, the highest since May 16.

BOE policy makers left their bond-purchasing program unaltered on Sept. 5 as they assessed the impact of Governor Mark Carney’s forward guidance introduced in August.

The Monetary Policy Committee held the target for asset purchases at 375 billion pounds ($596 billion) and kept its key interest rate at a record low 0.5 percent. Carney and colleagues signaled last month that they don’t intend to raise the rate from 0.5 percent before late-2016.