European session review: USD gains as investors await Fed's rate decision and weigh virus concerns

USD traded higher against other major currencies in the European session on Wednesday as traders continued to weigh concerns over a fast-spreading coronavirus, while awaiting the outcomes of the Federal Reserve meeting later on Wednesday. The dollar index increased by 0.1 percent to 98.12. 

The Fed is due to release its policy statement at 19:00 GMT and its Chair Jerome Powell is scheduled to hold a news conference half an hour later. It is widely expected that policymakers will decide to keep the Fed's target policy rate in the current range of 1.50% and 1.75%. Markets are curious whether Powell retains his cautiously upbeat language.

GBP traded mixed against its major counterparts as the market participants await the announcement of the rate decision by the Bank of England (BoE) on Thursday. Money markets currently see a 46% chance of a 25 bps rate cut to the BoE’s 0.75% policy rate. In addition, traders digested the latest data from Nationwide Building Society (NBS), which showed the UK's house prices increased at a faster-than-forecast pace in January. According to the report, house prices rose 1.9 percent y/y in January, following a 1.4 percent y/y gain in December. Economists had expected a 1.5% increase. On a monthly basis, house prices advanced by 0.5 percent, after taking account of seasonal factors, compared to a 0.1 percent uptick in December. Economists had expected a 0.3 percent increase.

Elsewhere, EUR traded mixed against its major rivals after the release of the results of the survey of consumer confidence in Germany. The report from GfK Group revealed that consumer sentiment in Germany is set to improve in February amid further improvement in economic and income expectations. The forward-looking GfK consumer confidence index for February edged up to 9.9 points from 9.7 in January, which was revised from 9.6. Economists had expected the reading to remain unchanged at 9.6.