Dollar little changed as traders seek direction from Fed meeting

By Administrator_India

Capital Sands

The U.S. dollar held steady against major currencies on Monday, after posting its biggest weekly gain in more than a month, as traders closed short positions ahead of a Federal Reserve policy meeting this week.

The greenback was trading little changed at $1.21075 against the euro in Asia, after touching an almost one-month top of $1.2093 in the previous session, amid caution ahead of the Fed meeting that runs two days to Wednesday.

The yen was at 109.715, after weakening to 109.840 on Friday for the first time since June 4.

The dollar index, which measures the U.S. currency against six rivals, was mostly flat at 90.510 from as high as 90.612 on Friday. It finished last week with a 0.4% advance.

In recent weeks, the index has fluctuated as traders weighed if inflationary pressure as the economy reopens after the pandemic could force the Federal Open Market Committee (FOMC) into an earlier tapering of stimulus.

Repeated comments by policy makers that inflation would be transitory calmed those jitters, but markets also now anticipate the Fed may be close to giving clues on the timing for slimming its asset-purchase programme.

“The dollar repositioning shows some nerves heading into the FOMC policy update,” NAB strategist Jason Wong wrote in a note.

“Over the past month there appears to have been a growing chorus that the time to talk about tapering bond purchases had been reached.”

Among other currencies, New Zealand’s dollar held onto declines from last week to trade at $0.71315, after matching the lowest since mid-April at $0.71160 on Friday.

In cryptocurrencies, bitcoin traded around $39,000 after recovering from close to $31,000 last week.

Rival ether was at around $2,500, the middle of a narrowing trading range spanning the past month.