Against a range of currencies, the dollar steadied at 98.57

The ​dollar firmed on Wednesday as investors awaited a closely watched ‌U.S. central bank rate decision, which will be Jerome Powell’s last as central bank chair, with war in the Middle East raging and hopes for an imminent resolution dimming. Currencies held tight ranges in thinned Asia trade, with markets in Japan closed for a holiday and a ‌slew of major central bank decisions still on deck.

Against the dollar, the euro last bought $1.1716 while sterling was little changed at $1.3523, as both currencies edged further away from their highs hit earlier this month. The U.S. central bank’s policy outcome due later in the day takes centre stage, with the central bank widely expected to maintain its stance on rates, though the focus will be on its assessment of the ‌war’s impact on the local economy and on Chair’s future.

The question is what Powell is going to do, because he still holds the governor seat until 2028, so whether ‌he chooses to resign after the expiry of the Chair term or if he stays on as a governor and as sort of a shadow Chair, said Carol Kong, a currency strategist at Commonwealth Bank of Australia. Powell has previously said that he will stay on if he thinks that the Fed independence is under threat, so I think his decision will depend on his perception of Fed independence.

Against a range of currencies, the dollar held ⁠to a small ​overnight gain and steadied at 98.57.

The Canadian ⁠dollar firmed slightly to C$1.3676, ahead of the Bank of Canada’s rate decision also due on Wednesday.

On the geopolitics front, efforts to end the Iran war were at an impasse with the U.S. president unhappy with the latest proposal from ⁠Tehran, as the president wants nuclear issues dealt with from the outset.

That kept the market mood fragile and the dollar underpinned by safe-haven demand.