Dollar grinds lower on bets U.S. tapering remains distant

  • Reuters
  • Forex News
Dollar grinds lower on bets U.S. tapering remains distant
Credit: © Reuters.

* Focus is on Fed meeting ending Wednesday

* Treasury yields and dollar likely to fall on Fed stance

* Euro bid on improving economic data

* Turkish lira at risk of testing all-time low

By Stanley White

TOKYO, April 26 (Reuters) - The dollar edged lower on Monday amid speculation that U.S. Federal Reserve Chairman Jerome Powell will shun talk of tapering bond purchases at a policy meeting this week.

The euro rose to a near two-month high against the greenback before data later on Monday forecast to show an improvement in German business sentiment, which would bolster hopes for a brighter economic outlook.

Powell is likely to face questions over whether an improving labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.

"The dollar is likely to continue to trend lower in line with the gathering momentum in the world economy," analysts at Commonwealth Bank of Australia wrote in a research note.

"We expect the Fed policy meeting to be a non-event for the dollar. The U.S. economy is a long way from meeting the 'substantial further progress' threshold for the Fed to taper its asset purchases."

The dollar stood at 107.75 yen JPY=D3, close to its lowest since March 4.

The euro EUR=D3 rose to $1.2110, adding to gains made on Friday after positive data on European services and manufacturing activity. survey from Germany's Ifo institute due later on Monday is expected to show business conditions continued to improve in Europe's largest economy.

The British pound GBP=D3 was quoted at $1.3897, adding to a 0.3% gain in the previous session.

The dollar was little changed at 0.9128 Swiss franc CHF=EBS , close to a two-month low.

The Fed's next meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to Powell's comments after the meeting.

Rising coronavirus vaccination rates and an improving economic outlook are reasons to be optimistic, but many traders and analysts say Powell is likely to reiterate his commitment to keep easy policy in place for an extended period.

U.S. funds have been selling the dollar against the yen recently in Asian trading, which is an additional sign that major investors expect lower U.S. Treasury yields to push the dollar lower, some traders in Tokyo said.

In emerging markets, traders are watching the Turkish lira TRYTOM=D3 to see if it will test its all-time low of 8.58 per dollar due to worsening relations with the United States and worries about a dovish central bank governor. The lira was last quoted at 8.4285.

The onshore yuan CNY=CFXS edged up to 6.4866 per dollar, just shy of a six-week high.

Elsewhere, the Australian AUD=D3 and New Zealand dollars NZD=D3 rose toward one-month highs but are likely to track moves in global commodity prices, traders said.

In the cryptocurrency market, Bitcoin BTC=BTSP reclaimed the $50,000 mark and smaller rival Ether ETH=BTSP rose, recouping some of their losses from last week triggered by U.S. President Joe Biden's plan to raise capital gains taxes for wealthy investors. bid prices at 0159 GMT Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.2110

$1.2097

+0.11%

-0.88%

+1.2112

+1.2089 Dollar/Yen

JPY=EBS

107.7500

107.8800

+0.00%

+4.45%

+107.9350 +107.8250 Euro/Yen

130.46

+0.02%

+2.81%

+130.5900 +130.3800

S>

Dollar/Swiss

CHF=EBS

0.9128

0.9137

-0.09%

+3.18%

+0.9140

+0.9128 Sterling/Dollar GBP=D3

1.3897

1.3881

+0.14%

+1.74%

+1.3900

+1.3872 Dollar/Canadian CAD=D3

1.2456

1.2475

-0.18%

-2.21%

+1.2490

+1.2453 Aussie/Dollar

AUD=D3

0.7770

0.7746

+0.36%

+1.06%

+0.7773

+0.7735 NZ

NZD=D3

0.7211

0.7195

+0.26%

+0.45%

+0.7216

+0.7191 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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