US Dollar Edges Lower Amid Revised IMF Forecast

The US dollar declined against a basket of its major peers, as accelerated growth in advanced economies boosted the International Monetary Fund’s global outlook.

The dollar index fell 0.1 percent to 81.14, as the forex market increased its stake in the British pound. Sterling regained its footing after the IMF boosted its forecast for the UK economy from 1.9 percent to 2.4 percent. Sterling gained 45 pips to 1.6475 US.

Meanwhile, the euro held steady after the IMF said it expects the currency union to grow 1 percent this year and 1.4 percent in 2015. The EURUSD pair was trading at 1.3552 in North America’s late-afternoon session, resurfacing from an intraday low of 1.3516.

The dollar held steady versus the yen after Japan’s growth outlook was revised up from 1.2 percent to 1.7 percent. Along with the United States and United Kingdom, Japan is expected to anchor global recovery in 2014, according to the IMF’s World Economic Outlook.

In North America, the forex market maintained bearish pressure on the Canadian dollar, which continued to decline ahead of the Bank of Canada’s mid-week rate decision. The USDCAD pair broke the psychological 1.10 barrier prior to consolidating at 1.0978, a gain of 30 pips. The IMF said Canada’s gross domestic product will grow 2.2 percent this year and 2.4 percent in 2015, compared to an initial estimate of 2.1 percent and 2.5 percent, respectively.

Facing a relatively light schedule this week, the US dollar could gain considerable traction leading up to the January 28-9 FOMC policy meetings. The Fed could taper asset purchases by up to $15 billion at its next meetings, according to market speculation.