07:53 AM EDT, 09/18/2024 (MT Newswires) -- The US dollar fell against its major trading partners early Wednesday as markets prepared for a likely rate reduction by the Federal Open Market Committee in the afternoon.

The CME FedWatch tool shows a 63% chance of a 50 basis point rate reduction being priced in from the current target range of 5.25% to 5.50% and a 37% chance of a smaller 25 basis point rate reduction, in line with the percentages seen at the same time Tuesday.

The FOMC statement is scheduled to be released at 2:00 pm ET, followed by Federal Reserve Chairman Jerome Powell's press conference at 2:30 pm ET.

Home building data for August is set to be released at 8:30 am ET, followed by weekly petroleum stocks at 10:30 am ET, an update to the Atlanta Fed's gross domestic product Nowcast estimate around midday and the Treasury's monthly TICS report for July at 4:00 pm ET.

Earlier Wednesday, the Mortgage Bankers Association said that mortgage applications surged in the week ended Sept. 13, the result of a further drop in mortgage rates to their lowest point since September 2022.

A quick summary of foreign exchange activity heading into Wednesday:

EUR/USD rose to 1.1133 from 1.1115 at the Tuesday US close and was little changed from a level of 1.1134 at the same time Tuesday morning. Eurozone consumer prices rose less than expected in August while core prices rebounded as expected from a decline in the previous month, data released earlier Wednesday showed. The year-over-year rates slowed from July. The next European Central Bank meeting is scheduled for Oct. 17. ECB policy board member Elizabeth McCaul is due to speak at 8:00 am ET.

GBP/USD rose to 1.3210 from 1.3162 at the Tuesday US close and was roughly unchanged from a level of 1.3211 at the same time Tuesday morning. UK consumer prices, both overall and core, rose as expected in August, lifting the year-over-year rate for the core and leaving the rate for overall prices steady, data release overnight showed. The next Bank of England meeting is scheduled for Thursday, when no change in interest rates is expected.

USD/JPY fell to 141.5865 from 142.2324 at the Tuesday US close but was above a level of 140.7210 at the same time Tuesday morning. Japan's trade deficit widened in August from July but was narrower than a year earlier due to a surge in exports that outweighed a smaller gain in imports, data released overnight showed. The next Bank of Japan meeting is scheduled for Thursday and Friday, with the policy announcement scheduled for release late Thursday evening in US time. No change in interest rates is expected.

USD/CAD fell to 1.3586 from 1.3598 at the Tuesday US close and 1.3595 at the same time Tuesday morning. Canadian foreign securities purchases data for July are due to be released at 8:30 am ET. The next Bank of Canada meeting is scheduled for Oct. 23.