Early trade in NY: Dollar slips against basket of currencies

NEW YORK: The dollar edged lower against a basket of major currencies on Monday but its moves were largely muted as traders awaited a much-anticipated US Federal Reserve meeting later this week that might signal a change in the outlook for US 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.

The dollar index, which measures the greenback against a basket of six currencies, was up 0.1% at 90.427. Last week the index rose 0.4%, its largest weekly change in five weeks.

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

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, after getting an almost 10% lift on Sunday, when Tesla Inc CEO Elon Musk tweeted that the electric carmaker will allow bitcoin transactions again when miners who verify transactions use more renewable energy.