Pricing in derivatives markets suggests the market expects further tightening, before cuts later in the year. "In the less likely outcome that the Fed give the impression that they could pause after this week's hike, then the U.S. dollar could easily sell off and risky assets rally," said Chris Weston, head of research at broker Pepperstone in Melbourne. Investors then expect the ECB and BoE to raise their main interest rates by 50 bps each on Thursday. Sterling was last 0.29% lower at $1.231, but was on track for its fourth monthly increase. The yen was up 0.1% at 130.34 per dollar and was set for its third monthly gain, with markets anticipating a shift in Japanese monetary policy. Markets mostly shrugged off slightly better-than-expected Chinese manufacturing data, which showed a welcome return to growth in January, with focus now on the recovery ahead. The Aussie was last down 0.74% to $0.701. The kiwi was 0.63% lower at $0.643. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The euro vs. the dollar ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Harry Robertson and Tom Westbrook; Editing by Christian Schmollinger and Christina Fincher)
(Adds analyst comments, details of dollar's recent fall,
updates prices)
By Harry Robertson and Tom Westbrook
LONDON/SINGAPORE, Jan 31 (Reuters) - The dollar ticked
higher on Tuesday ahead of a raft of central bank decisions but
remained on track for its fourth consecutive monthly loss.
The Federal Reserve will set interest rates on Wednesday,
followed by the European Central Bank (ECB) and Bank of England
(BoE) on Thursday.
Currencies struggled for direction overnight, with the euro slipping against the dollar in early trade in Europe
and was last down 0.41% at $1.081.
It was "likely some profit-taking ahead of the key event
risks just ahead," said Alvin Tan, head of Asia FX strategy at
RBC Capital Markets. Analysts also said investors were likely
rebalancing their portfolios at the end of the month.
The euro remains up more than 0.8% for the month and is
loitering near a nine-month peak after falling energy prices
gave the euro zone economy a reprieve.
The U.S. dollar index , which gauges the currency
against major peers, was up 0.31% at 102.56 on Tuesday.
Yet it was down around 0.9% for January as a whole. That
meant it was set for its fourth monthly drop, having fallen
around 11% since hitting a 20-year peak in late September.
"These foundations of dollar strength continue to be
undermined, whether it's the less bad global economic outlook,
whether it's the Fed easing back," said Ben Laidler, global
markets strategist at trading platform eToro.
A busy week for markets continued on Tuesday as investors
awaited fourth-quarter economic figures for the euro zone. Data
on Monday showed Germany's economy unexpectedly shrank in the
final quarter of 2022.
The big event of the week comes on Wednesday, when the Fed
is expected to raise interest rates by 25 basis points (bps),
its smallest increase since March 2022, to a range of 4.5% to
4.75%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.