NEW YORK: The US dollar dipped slightly against a basket of peer currencies on Tuesday as investors held off from making big bets ahead of the outcome of this week’s two-day Federal Reserve policy meeting.
The greenback was 0.026% softer at 92.582 by 10:30 a.m. Eastern time, within striking distance of its 3-1/2 month high of 93.19 hit on July 21.
The dollar has risen broadly for more than a month on expectations that as the economic recovery gains steam, the Fed will begin to taper its monetary support. Investors turned long dollars for the first time since March 2020 last week, positioning data shows.
The Fed begins its two-day meeting on Tuesday, to be followed by a press conference by Chair Jerome Powell on Wednesday, where investors will be listening closely for any taper-related comments.
“I think he’s just going to signal to markets that they’ve been discussing the size of the taper, they’re discussing how to taper, but they’re still in somewhat of a wait-and-see mode, given where we are in the recovery,” said Edward Moya, senior market analyst at OANDA.
“So, they’re going to try to punt it, but I think there will be some hawkishness.”
On the domestic data front, US consumer confidence hovered at a 17-month high in July, suggesting the economy maintained its strong growth clip at the start of the third quarter.
GROWTH FORECAST
Continued fiscal support and better access to COVID-19 vaccines led the International Monetary Fund to upgrade its outlook for the United States and other wealthy economies on Tuesday, while downgrading its estimates for a number of developing economies.
Overall, the IMF maintained its 6% global growth forecast for 2021, in an update to its World Economic Outlook.
The euro edged up 0.06%, changing hands at $1.1808 versus the greenback, while sterling gained 0.03% to $1.3820, as early data seemed to show an ebb in surging COVID-19 cases in Britain in spite of the removal of many social curbs last week.
Elsewhere, concern over the spread of the Delta variant and Hong Kong stock market jitters weighed on risk-oriented currencies.
The Australian dollar weakened 0.42% while the New Zealand dollar was down 0.74%.
In cryptocurrencies, bitcoin was up 2.73% at $38,334.55, but off its Monday high of over $40,000, after Amazon.com said a weekend news report that said it was preparing to accept cryptocurrencies was false.