News: FOREX-Dollar on front foot as traders look to Fed for direction

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    • Greenback holds on to biggest weekly gain in a month
    • Traders look to FOMC meeting for clues on taper timing
    • FX market volatility dives to lowest since Feb. 2020

    The U.S. dollar edged up against major currencies on Monday, after posting its biggest weekly gain in more than a month, as traders closed short positions ahead of a much-anticipated Federal Reserve policy meeting.

    The greenback gained 0.1% to $1.20980 against the euro EUR=EBS in Asia, after touching an almost one-month top of $1.2093 in the previous session.

    The yen JPY=EBS fell 0.1% to 109.750 per dollar, after weakening to 109.840 on Friday for the first time since June 4.

    The dollar index =USD , which measures the U.S. currency against six rivals, was 0.1% stronger at 90.564. It reached a high of 90.612 on Friday, finishing the week with a 0.4% gain.

    "The dollar repositioning shows some nerves heading into the FOMC policy update," NAB strategist Jason Wong wrote in a note, referring to the Federal Open Market Committee that will meet over two days to Wednesday.

    "Over the past month there appears to have been a growing chorus that the time to talk about tapering bond purchases had been reached," Wong added.

    Dollar direction has been driven in recent weeks by fluctuating bets on whether inflationary pressure from an economic reopening could force the FOMC into an earlier tapering of currency-depreciating stimulus.

    Repeated comments by policy makers that inflation would be transitory have helped calm those jitters, but markets are now expecting new clues from the Fed on the timing of an exit from ultra-easy policy.

    Caution ahead of the Fed meeting has pushed a Deutsche Bank gauge of implied currency-market volatility .DBCVIX to the lowest since February of last year, dropping around 10% since the start of the month.

    In the week ended June 8, speculators wound up net dollar short positions NETUSDALL= to the highest in nearly three months at $18.35 billion.

    "While we acknowledge the uncertainty around tapering given the recent noise in data, we think that risks for USD ... remain somewhat asymmetric and skewed to the upside, though the pace of appreciation will likely be somewhat contingent on near-term Fed rhetoric," Morgan Stanley analysts wrote in a research report.

    In cryptocurrencies, bitcoin BTC=BTSP traded around $39,000 after getting an almost 10% lift on Sunday, when Tesla Inc TSLA.O CEO Elon Musk tweeted that the electric carmaker will resume allowing bitcoin transactions when miners who verify transactions use more renewable energy.

    The digital token has fluctuated on either side of $35,000 over the past month, dipping to near $31,000 at one point last week. It was at a record high of $64,895.22 just two months ago.

    Rival ether ETH=BTSP remained stuck around $2,500, the middle of a narrowing trading range spanning the past month.

    ======================================================== 
    	Currency bid prices at 0515 GMT 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
    											  Previous				   Change				  
    											  Session											
     Euro/Dollar	   EUR=EBS	$1.2102		$1.2109	 -0.05%		 -0.95%	  +1.2112	 +1.2095 
     Dollar/Yen		JPY=EBS	109.7450	   109.6600	+0.09%		 +6.26%	  +109.8250   +109.7300 
     Euro/Yen		 																			 
     Dollar/Swiss	  CHF=EBS	0.8990		 0.8980	  +0.11%		 +1.61%	  +0.8991	 +0.8978 
     Sterling/Dollar   GBP=D3	 1.4109		 1.4114	  -0.02%		 +3.28%	  +1.4118	 +1.4096 
     Dollar/Canadian   CAD=D3	 1.2151		 1.2170	  -0.16%		 -4.58%	  +1.2168	 +1.2149 
     Aussie/Dollar	 AUD=D3	 0.7710		 0.7707	  +0.05%		 +0.24%	  +0.7712	 +0.7694 
     NZ				NZD=D3	 0.7144		 0.7128	  +0.23%		 -0.52%	  +0.7146	 +0.7130 
     Dollar/Dollar																				   
    

    All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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    World FX rates	https://tmsnrt.rs/2RBWI5E 
    
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