The US dollar slowly regained ground against major trading counterparts, as a quiet day of range trading set the stage for tomorrow’s critical Federal Reserve interest rate announcement. Markets seemed unwilling to force major moves ahead of the highly anticipated FOMC meeting, as the outcome will surely decide the short-term direction for all US dollar-denominated currency pairs.

The euro pulled back further from last week’s record-highs, dropping $0.0010 to trade at $1.3866 on the New York afternoon. This paled in comparison to British Pound tumbles, as the Sterling was the hardest-hit by news of UK banking troubles. The GBPUSD shed a whopping 120 points to multi-week lows of $1.9948. Soft equity markets allowed the Japanese Yen to inch slightly higher through the afternoon, with the greenback losing ¥0.13 to ¥115.12.

A disappointing US Empire Manufacturing report had little effect on the dollar, as speculators remain on the sidelines ahead of tomorrow’s critical central bank announcement. That being said, the manufacturing data painted a mixed picture for the future of industrial growth in the New York Fed region. A sizeable drop in the headline index reflected a sharp decline in demand, with the New Orders sub-index at its worst levels since May. This unsurprisingly coincided with a dramatic change in the Shipments reading—falling a massive 23 points to 5.09 in September. A slightly less convincing jump in Prices Received did little to improve sentiment, leaving a pessimistic outlook for the future of regional manufacturing growth.

The US dollar remained almost squarely unchanged following the report, making it plainly obvious that markets await the upcoming FOMC rate decision. The outcome of said Federal Reserve meeting will clearly guide expectations for the future of US dollar price action. Markets and analysts agree that the Fed is almost guaranteed to cut rates by at least 25 basis points to 5.00 percent. In fact, Fed Funds futures contracts show an exactly 0.0% probability of unchanged rates. Yet futures traders are almost evenly divided amongst those who expect a 25bp rate cut and a 50bp rate cut. According to Bloomberg calculations, such probabilities are currently at 52.0 and 48.0 percent, respectively. Such indecision almost guarantees significant volatility on the report, leaving forex traders on the defensive ahead of the release.

Domestic equity markets likewise saw quiet trade ahead of tomorrow’s data, with the Dow Jones Industrial Average almost exactly unchanged at 13,426. Yet technology stocks fared significantly worse on the day’s trade, with the NASDAQ Composite down 0.6 percent to 2,587. The broader S&P 500 Index felt the pinch from the falling technology sector, shedding 0.3 percent to 1,480.

Government Treasury bonds diverged from their typical correlation with stocks, as the 2-year Note lost 1/16 points in price to 99 and 7/8. Yields bounced 3 basis points to 4.07 percent, while the 10-year note added 2bp in yield to 4.47 percent.

David Rodriguez is a Currency Analyst at FXCM.