- Yen hovers at nine-month lows, euro flat
- Focus on Fed comments about higher bond yields
- Sterling dips ahead of BoE meeting on Thursday
- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Adds analyst comments; updates prices)
The U.S. dollar clung to small gains on Tuesday as caution reigned in currency markets ahead of major central bank meetings, beginning with a two-day Federal Reserve gathering due to start later in the global day.
The greenback hovered just off its highest since June versus the yen JPY= and cemented a position around $1.19 per euro EUR= in muted trading.
The firmer tone for the dollar came despite a retreat in U.S. benchmark yields from the highest levels in more than a year ahead of the Fed meeting.
Expectations are running low for monetary policymakers to shift from their accommodative stance despite forecasts of rapid economic growth in the wake of an accelerating COVID-19 vaccine roll-out and a $1.9 trillion pandemic relief package.
Investors will pore over whatever the Fed has to say about the run-up in yields, which have risen on bets that economic growth and inflation could prompt a faster-than-expected normalisation of monetary policy.
"It's a very pivotal meeting from that perspective," said Mayank Mishra, an FX strategist at Standard Chartered Bank in Singapore.
"The other thing that is being awaited is any decision on the supplemental leverage ratio (SLR) exemption. We don't expect any explicit push back on back-end yields, but an extension of the SLR can offer some relief to the market."
The SLR exemption, a regulatory break that allows big banks to exclude reserve deposits and Treasuries from capital ratios, is due to expire on March 31.
The dollar was little changed at 109.170 yen after rising to a nine-month high of 109.365 on Monday. The Bank of Japan begins a two-day policy meeting on Thursday, along with an extensive policy review.
The euro was largely flat at $1.19330, languishing below $1.20 since March 5. Europe's vaccine roll-out has been hampered by the suspension of AstraZeneca AZN.L shots in Germany, France and other nations amid concerns about possible serious side effects.
Sterling fell about 0.2% to $1.3871 GBP= ahead of a Bank of England meeting on Thursday, where the central bank is expected to keep its benchmark interest rate at its historic low of 0.1% and its bond-buying programme unchanged.
The dollar's index against six major currencies was flat at 91.798 USD= after rising nearly 0.2% on Monday.
The Australian dollar AUD= , viewed widely as a liquid proxy for risk appetite, and the New Zealand dollar NZD= were little changed against the U.S. dollar. The commodity-linked currencies are on course to post their fourth straight quarterly gain as commodity prices rebound on bets of economic growth.
Bitcoin, meanwhile, slipped to $54,198.64 following its jump to a record $61,781.83 on Saturday.
======================================================== Currency bid prices at 0400 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.1934 $1.1929 +0.04% -2.32% +1.1937 +1.1923 Dollar/Yen JPY=D3 109.1550 109.1200 +0.06% +5.71% +109.2400 +109.1900 Euro/Yen EURJPY= 130.26 130.16 +0.08% +2.63% +130.3900 +130.1400 Dollar/Swiss CHF=EBS 0.9266 0.9275 -0.10% +4.74% +0.9279 +0.9266 Sterling/Dollar GBP=D3 1.3869 1.3900 -0.21% +1.53% +1.3903 +1.3867 Dollar/Canadian CAD=D3 1.2478 1.2473 +0.05% -2.00% +1.2487 +1.2468 Aussie/Dollar AUD=D3 0.7752 0.7756 -0.05% +0.77% +0.7755 +0.7742 NZ NZD=D3 0.7195 0.7200 +0.00% +0.26% +0.7205 +0.7195 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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