Dollar Marginally Lower Ahead of Fed Meeting
U.S. Dollar Trades in Tight Range
The U.S. dollar traded in a tight range early in the European session Tuesday ahead of the start of the latest two-day Federal Reserve policy meeting, while the euro weakened. At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.340, only marginally removed from the six-week high of 103.82 it touched last week.
Dollar Stable as Fed Meeting Starts
Traders have appeared to be reluctant to push the dollar around ahead of the start of the Federal Reserve’s two-day meeting, which concludes on Wednesday. The escalating geopolitical tensions in the Middle East, with the U.S. vowing to take “all necessary actions” to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, meant the greenback retained underlying support.
Euro Slips Lower Ahead of Eurozone GDP
In Europe, the euro traded 0.1% lower at 1.0824, after data showed that the German economy contracted in the fourth quarter, raising the potential that woes of the region’s largest economy could drag the whole eurozone into recession. Data released earlier Tuesday by market researcher Kantar showed that British grocery price inflation declined at a slower rate in January, with annual grocery price inflation at 6.8% in the four weeks to Jan. 21, down from a re-stated 6.9% in the previous four-week period.
Yuan Sentiment Still Negative
In Asia, the yuan fell 0.1% to 147.36, with the yen gaining slightly after Japan’s inflation fell to 2.4% in December from the previous month, government data showed on Tuesday, just under the forecast of 2.5%. “The Evergrande headlines yesterday serve as a reminder that there are no quick fixes for the property sector and the measures announced by policymakers to support local equity markets, such as restrictions on short-selling, are not proving effective,” ING added.
