LONDON: The dollar edged up, gold steadied and European shares held near five-year highs on Tuesday as investors look out for US Federal Reserve signals on the future of its stimulus programme.
Upbeat comments from Chicago policymaker Charles Evans have made Wednesday's release of minutes of the US central bank's last meeting and Fed chairman Ben Bernanke's testimony in Congress the same day the main focus for markets.
The usually dovish Evans said on Monday that as long as the recent pickup in the US jobs market continued he was "open-minded" about slowing the Fed's $85 billion a month bond-buying programme, and he even mentioned the idea of simply halting it.
The dollar was up 0.25 percent against a basket of major currencies as mid-morning approached in Europe, although that was comfortably below its recent three-year high.
Economists expect Fed Chairman Bernanke to deliver a steady message on the bank's policy when he speaks to US Congress. But any hint that it plans to wind in its support in the coming months could unsettle markets used to a steady drip of stimulus.
Having hit a five-year high on Monday, top European shares were 0.3 percent lower by 0815 GMT as investors took the pre-Fed uncertainty as a cue to cash in on some of the recent sharp gains.
"With the economic numbers being pretty good in the States, there may be an easing back of QE (quantitative easing bond-buying stimulus) sooner rather than later," said Berkeley Futures associate director Richard Griffiths.
"The DAX and Euro STOXX have moved ahead a lot more than the UK, so in the event of any profit-taking in the US, the European markets may drop just that little bit more."
It was a similar story in the bond market, where safe-haven German Bund futures lost ground. If the Fed does slow its bond-buying it will effectively be a tightening of monetary policy and thereby push up benchmark bond yields.
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