Exotic currencies are diving ahead of the Fed's expected rate hike
Fed Chairman Janet Yellen will likely announce that the Federal Funds Rate will increase to 0.25%, taking America away from zero interest rates for the first time since 2006, ending an historic chapter in the country's monetary policy.
While the markets have been expecting the hike for months, emerging market currencies don't look to have prepared themselves, and many are falling back against the dollar on Wednesday.
The biggest loser right now against the dollar is the South African Rand, which along with jitters about the Fed, is still feeling the impact of South Africa's president Jacob Zuma sacking two finance ministers in less than a week. The dollar is up more than 0.8% against the Rand.
Elsewhere in emerging markets, the dollar is more than half a percent up against the Brazilian real, aided by the fresh fall of oil prices on Wednesday morning. The US dollar has also shot up by about 0.35% against Singaporean dollars.
The only big exception to this emerging market lethargy against the dollar is the Russian ruble, which has gained 0.4% against the greenback today.
The dollar's bull-run against major currencies this year seems to have come to a standstill on Wednesday.
The run's halt comes as investors wait for Yellen's rate decision, and more importantly - according to a note sent this morning by Morgan Stanley FX strategists Hans Redeker, and Ian Stannard - the Fed's summary of its economic projections going forward.
The EUR/USD cross is down roughly 0.1%, while GBP/USD is down slightly more, around 0.17%. The dollar is also largely unmoved against the Swiss Franc, and the Japanese Yen, as well as both the Canadian and Australian dollars. All four currencies have moved less than 0.1% against the greenback today.
Here's how the Euro and the dollar compare so far today:
