Dollar slips in muted trading as Fed meeting looms; Bitcoin tops $40,000

0
80
imageForex11 minutes ago (Jun 14, 2021 20:50)

© Reuters. FILE PHOTO: A man counts U.S. dollar banknotes at a currency exchange shop in Beirut, Lebanon March 23, 2021. REUTERS/Mohamed Azakir/File photo

By Saqib Iqbal Ahmed and Saikat Chatterjee

NEW YORK (Reuters) -The dollar was little changed against a basket of major currencies on Monday as traders awaited a much-anticipated U.S. Federal Reserve meeting later this week that might signal a change in the outlook for U.S. monetary policy.

Currency markets settled in tight ranges with implied volatility plumbing to multi-year lows after last week’s strong inflation readings and a dovish European Central Bank meeting failed to dislodge currencies from recent trading levels.

“It’s all about the FOMC this week, and we’ll be watching to see exactly how much taper talk has really been going on and if it has any impact on the medium term outlook,” Brad Bechtel, global head of FX at Jefferies, said in a note.

The dollar index, which measures the greenback against a basket of six currencies, was about flat on the day at 90.512. Last week the index rose 0.4%, its largest weekly change in five weeks.

Muted FX moves in recent weeks crushed the Deutsche Bank (DE:DBKGn) FX Volatility Index down to 5.6 on Friday, its lowest in nearly 16 months.

Against the yen the dollar rose 0.38% to a more than one-week high of 110.09 yen.

“A modest uptick in Treasury yields has been supportive of the rate-sensitive pairing,” said Ronald Simpson, managing director, global currency analysis at Action Economics.

The dollar’s strength against the Japanese currency may be a sign the FX market is looking for a less dovish outcome from the Fed meeting, Simpson said.

The Fed begins a scheduled two-day policy meeting on Tuesday. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter, despite a patchy recovery in the job market.

Recent data pointing to a surge in inflation has raised concerns that price pressure following the post-COVID-19 economic reopening could force policymakers into an earlier tapering of currency-depreciating stimulus.

Sterling was largely unmoved by Monday’s news that Britain is set to delay the end of social distancing measures as the government seeks to contain a rapid rise in COVID-19 infections.

In cryptocurrencies, bitcoin traded above $40,000 for the first time in more than two weeks, before pairing gains to trade at $39,649.03.

Dollar steady as Fed meeting looms; bitcoin pops above $40,000

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

LEAVE A REPLY

Please enter your comment!
Please enter your name here