NEW YORK: The US dollar eased against a basket of currencies on Tuesday as traders awaited a raft of central bank interest rate decisions this week, including one by the Federal Reserve on Wednesday.
The dollar index, which measures the currency against six major counterparts, was down 0.07% at 105.01, not far from the six-month high of 105.43 touched on Thursday. The index rose for its ninth straight week last week, its longest winning streak in nearly a decade.
Resilient US growth has fueled a rebound in the dollar in recent weeks though the rally will likely be tested by a gauntlet of data and Wednesday’s Fed interest rate decision.
The dollar came under some pressure against the euro on Tuesday following a report that indicated the European Central Bank may soon start discussing how to drain some of the excess liquidity in the banking system, while the yen wallowed near 10-month lows against the dollar.
A Reuters report on Monday citing six sources said the debate over the multi-trillion-euro pool of excess liquidity sloshing around banks was likely to start next month.
The euro was about flat at $1.06915, after rising as high as $1.0718 earlier in the session.
Some analysts, however, see further gains for the US currency.
The Australian dollar was 0.43% higher after minutes of the Reserve Bank of Australia’s latest policy meeting signaled that there would be more interest rate hikes to come.
The Canadian dollar was trading 0.62% higher after having strengthened to a six-week high against its US counterpart on Tuesday, as investors raised bets on additional interest rate hikes by the Bank of Canada following hotter-than-expected inflation data.
The yen was last down 0.07% versus the greenback at 147.70 per dollar, drawing a lot of focus at the moment, as the BOJ prepares to meet to discuss monetary policy on Friday.
Meanwhile, the British pound was 0.12% higher at $1.2399, hovering near three-month lows, ahead of a Bank of England interest rate decision on Thursday which is expected to yield a final rate rise in the current cycle.
In cryptocurrencies, bitcoin rose 0.68% to $26,951, close to a 3-week high.
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