U.S. dollar mixed due to investors biding time before Fed’s meeting
The dollar on Tuesday was mixed against major peers, it gained against yen and commodity currencies with investors biding time ahead of the policy by the U.S. Federal Reserve.
As the Bank of Japan kept its policy on hold, the yen hardly moved.
Ahead of the fed’s two-day meeting which ends on Wednesday, trading in currency was largely moderate. It is expected that there won’t be changed in the policy following the fed’s meeting.
All ears will be towards Jerome Powell, Fed Chairman, who is likely to address queries and questions about whether the improving economic conditions warrant a withdrawal of monetary easing. It is expected by the analysts that Powell will stick to Fed’s ultra-accommodative stance, which should weigh on Treasury yields and dollar.
“The Fed is expected to maintain the current policy setting on Wednesday, but the traders are well aware that a hawkish shift – an acknowledgment of underlying economic strength – could trigger renewed dollar upside,” stated chief market strategist, Karl Schamotta, at Cambridge Global Payments in Toronto.
He added “if the signs of optimism leak through in the official statement or during a press conference, investors are likely to bring tapering expectation forward and drive Treasury yields upwards. Awareness in this risk is keeping the traders parked in at dollar.”
The dollar added 0.4% to 108.50 yen, currency continuing its rise from the seven-week low of 107.48 as of Friday.
As U.S. Treasury yields traded in a narrow range after receding from a 14-month high of 1.7760%, the dollar has fallen almost 3% since late March. Euro was slightly down at $1.2078, which is not far from a two-month high of $1.2117.
The Chinese yuan retreated 0.1% to 6.4789, after its seven-week top of 6.4710 per dollar as on Monday.
Under crypto, bitcoins hit a high of $55,354.59, followed by its fall of 10% on Monday, as JPMorgan announced to launch a new cryptocurrency.