- Caution ahead of Fed's statement on Wednesday
- Traders watching for clues on timing of Fed tapering
- Bitcoin reclaims $40,000 level
(Adds comments, data, updates prices)
The dollar stabilised near multi-week highs on Tuesday as traders turned cautious ahead of the Federal Reserve's two-day policy meeting which could provide hints of any plans to start tapering its bond purchases.
So far Fed officials, led by Chair Jerome Powell, have stressed that rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time to come but recent economic data has raised concerns that price pressure could force an earlier stimulus withdrawal.
"That is exactly what makes tomorrow’s Fed meeting so interesting: market participants simply cannot be certain which aspect will weigh more heavily on the Fed’s mind", Commerzbank analyst Esther Reichelt wrote in a note to her clients.
Nearly 60% of economists in a Reuters poll expect a tapering announcement in the next quarter.
Investors are hoping that U.S. retail sales and a manufacturing survey later on Tuesday will give clues as to what to expect from the Fed's statement and news conference on Wednesday.
In the meantime though, prudence is palpable across trading floors.
"No USD trader will want to take too clear a position ahead of Wednesday’s meeting as uncertainties are simply too high", Reichelt said.
The dollar index edged lower in the Asian session and at 0716 GMT, was down 0.1% at 90.40 =USD , hovering near multi-week highs.
Yields on benchmark 10-year U.S. Treasuries US10YT=RR were at 1.48%, well below the 1.60% level they were trading at toward the beginning of June.
The euro EUR=EBS rose 0.15% to $1.2126, just above a one-month low of $1.2093 it hit last week while the yen JPY=EBS hit a seven-session low of 110.02 per dollar.
The Australian dollar AUD=D3 slipped to $0.7705 after minutes from the Reserve Bank of Australia's last meeting showed the bank was prepared to keep buying bonds even though the economy has recovered its pre-pandemic output.
The impact of Britain and Australia announcing a trade deal was still unclear but is expected to benefit Australian farmers.
Sterling GBP=D3 was little changed against the dollar at $1.4118.
In cryptocurrencies, bitcoin BTC=BTSP was able to steady above $40,000 on Tuesday and is approaching its 200-day moving average - finding support from the promise of fresh investment from major backer MicroStrategy and from Elon Musk.
Tesla TSLA.O boss Musk on Sunday flagged that the carmaker could resume transactions using the token if miners can use cleaner energy to process them.
Ether ETH=BTSP also got a small lift from its bigger rival, and broke above its 20-day moving average to $2,612.
======================================================== Currency bid prices at 733 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.2142 $1.2121 +0.17% -0.63% +1.2145 +1.2114 Dollar/Yen JPY=EBS 110.0100 110.0650 -0.04% +6.52% +110.1450 +110.0200 Euro/YenDollar/Swiss CHF=EBS 0.8972 0.8995 -0.24% +1.42% +0.9001 +0.8972 Sterling/Dollar GBP=D3 1.4110 1.4105 +0.02% +3.26% +1.4128 +1.4100 Dollar/Canadian CAD=D3 1.2136 1.2149 -0.12% -4.71% +1.2150 +1.2130 Aussie/Dollar AUD=D3 0.7704 0.7712 -0.10% +0.15% +0.7716 +0.7696 NZ NZD=D3 0.7150 0.7144 +0.10% -0.42% +0.7160 +0.7132 Dollar/Dollar All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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