LONDON: The dollar edged up against the yen and euro while European and Asian shares recouped some of last week's losses on Monday, as investors hunkered down for the US Federal Reserve's meeting later this week.
Uncertainty over the Fed's future policy course has triggered a sharp sell-off in broad risk assets in recent weeks and investors are hoping for some clarity on its intentions when it concludes a regular two-day meeting on Wednesday.
After a 2.7 percent jump in Japan's Nikkei had lifted Asian markets, European shares headed towards mid-morning up 1 percent. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX all climbed between 0.7 and 1.5 percent.
Markets appeared to be largely putting aside last week's concerns about a reduction in Fed stimulus and settling on the view that it will stress its intention to take a cautious approach to moving down the gears when the time comes.
The dollar was broadly stronger as a result although it was starting to flag. The jump in the Nikkei had seen the yen fall back to 95 yen to the dollar from a two-month high hit last week, while the greenback was up at $1.3339 per euro but had begun to slip.
"I think Bernanke is going to stress that any tapering off of the Fed's QE programmes will be dependent on the data flow but that it is still too soon at the moment to reduce the purchases," said Peter De Bruin, a senior economist at ABN Amro.
That message should calm markets, he added.
Financial markets have always known that the Fed would have to start withdrawing its stimulus once the US economy was out of the emergency ward, but Bernanke's comments on May 22 that the bank might 'take a step down' in the pace of bond purchases in coming months still came as a shock.
The positive side for investors is that it shows the global economy is gradually recovering.
Data on Monday showed German wages rose at their fastest pace in almost four years at the start of 2013 while euro zone exports jumped in April, giving the bloc a basis for a recovery from its long recession. UK house prices also picked up.
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