AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

NEW YORK/LONDON: The dollar rose slightly as the US Federal Reserve prepared on Tuesday to kick off its two-day policy meeting where it was expected to announce the start of tapering of its massive asset purchases put in place at the start of the COVID-19 pandemic.

Investors in recent weeks have priced in a wave of tightening from central banks as they bet policymakers are sufficiently concerned about rising inflation to end pandemic-era levels of easing.

The Reserve Bank of Australia (RBA), in the first of several central bank meetings this week, on Tuesday sounded a more dovish tone that investors had anticipated, weakening the Aussie dollar.

The Fed announces its policy decision on Wednesday, and the Bank of England will do so on Thursday.

"The theme of inflation getting out of control and forcing central banks into action is unfolding," said Edward Moya, a senior market analyst at Oanda.

The dollar index, which measures the greenback against a basket of peer currencies, was up 0.13% at 94.050.

The market has fully priced in the Fed's expected tapering announcement, and will be looking for any clues as to when the central bank will begin raising rates, similar to last week's European Central Bank meeting.

"The Fed is potentially going to do a better job than the ECB at pushing back those rate hike expectations, so I would anticipate that despite tapering, despite a possible knee-jerk move higher in yields, that we could see the dollar settle lower," Moya said.

Australia's central bank did not display the hawkish pivot many had expected, sending the Aussie dollar down 0.9% to $0.7452, its weakest since Oct. 19.

The RBA stressed that inflation was still too low, although it also omitted its previous projection that rates were unlikely to rise until 2024 and dropped a key target for the April 2024 government bond.

"Unlike other central banks (like the ECB recently), the RBA's message was successful in at least marginally scaling down hawkish bets, although markets are still pricing in 76bp (basis points) of tightening in the next 12 months," ING analysts said in a note.

Sterling was on the back foot, slipping 0.27% to $1.3626, ahead of Thursday's Bank of England meeting, where the market is pricing in an interest rate hike.

The euro edged 0.21% lower to $1.15825.

Elsewhere, the Swiss franc briefly hit a new 18-month high versus the euro. The single currency dropped to as weak as 1.0544 francs - the lowest since May 2020 - before bouncing back to trade at 1.0581, up 0.3% on the day.

The franc has been strengthening versus the US dollar, and was up 0.55% at $0.9141.

Marshall Gittler, Head of Investment Research at BDSwiss Holding, noted that sight deposits data suggested the Swiss National Bank - which worries about a stronger franc hurting the Swiss economy - was not intervening as actively to arrest the franc strength as it had during previous moves higher.

"This could be the way the SNB goes along with the global trend toward tighter monetary policy, only doing it through the exchange rate rather than through its policy rate," he said.

Comments

Comments are closed.