US Dollar firms as Fed policy meet gets underway

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US Dollar firms as Fed policy meet gets underway

On Tuesday, the US Dollar Index (DXY) measured against a basket of six major currencies edged higher, paring almost all of yesterday’s losses, as the US Federal Reserve’s two-day long policy meet gets off the ground.

In point of fact, in the day’s modest gains in American currency were almost entirely catalyzed by the US Fed’s ongoing policy meet, which would more likely to broadcast that the US Central Bank would soon begin to taper its monthly $120 billion bond repurchase program, set in motion at the onset of pandemic outbreak.

Apart from a restoration of safe-haven bid for the greenback, the RBA (Reserve Bank of Australia) had pivoted further upward spiral in American currency, as the Aussie Central Bank had announced a more dovish tone at its first meet this week, prompting the Australian Dollar to post its largest intra-session decline since September 29.

Nonetheless, the US Treasury bond Yields, which were largely mimicking American Dollar’s footprints, fell slightly as 10-year US Treasury bond notes were last trading at 1.54 per cent.

US Dollar gains as Fed expected to taper fiscal supports

Citing statistics, in the day’s FX market wind-down, the US Dollar Index had wrapped up the day 0.24 per cent higher to 94.09, while the Australian Dollar plunged as much as 1.23 per cent to $0.7426, the frailest since October 19.

Besides, British Pound shed 0.32 per cent to $1.3617 ahead of Thursday’s BoE (Bank of England) policy meet which is expected to announce a rate-hike, while the bloc’s common currency euro shrugs off 0.25 per cent to $1.1577.

Nonetheless, the safe-haven Swiss Franc had gained 0.6 per cent to $0.9145 against its American peer as Swiss Central Bank seemed more intrepid than anticipated over a stronger Franc. Meanwhile, addressing to a likely ease in the US Fed’s bond repurchase program as soon as by this week, a senior market analyst at Oanda, Edward Moya said, “The theme of inflation getting out of control and forcing central banks into action is unfolding”.