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Dollar trades unevenly, market awaits Fed decision

Por Gertrude Chavez-Dreyfuss

NEW YORK, Apr 27 (Reuters) – The dollar traded unevenly against its main rivals on Tuesday, gaining against the yen and commodity-related currencies, with investors awaiting the Federal Reserve’s monetary policy decision on Wednesday.

* The greenback, considered a safe-haven asset, has been disadvantaged by stocks surging to all-time highs, although a slight drop in equity indicators on Tuesday helped it stay above recent lows.

* Foreign exchange market operations were limited when the Fed began its two-day meeting on monetary policy. The central bank is expected to leave its strategy and stimulus programs unchanged in a statement on Wednesday.

* The market will pay close attention to comments from Fed Chairman Jerome Powell, who will likely address concerns about whether improving economic conditions justify the withdrawal of expansionary monetary policy.

* However, analysts expect it to stick to the current central bank stance, which should weigh on the returns on Treasuries and the dollar.

* At noon in New York, the dollar index, which compares the greenback to a basket of six prominent currencies, was flat at 90,912 units, after hitting its lowest level since March 3 in global trading, at 90,679 units.

* The dollar advanced 0.4% against its Japanese peer – another safe haven asset – at 108.50 yen, continuing to rise from seven-week lows of 107.48 yen where it was on Friday. The yen showed a subdued response after the Bank of Japan left its monetary policy unchanged, as the market widely expected.

* “Reflation operations are back,” Gavin Friend, a strategist for the National Bank of Australia, said in a podcast for clients. “Currencies other than the dollar should do better in this environment.”

* The dollar has fallen nearly 3% since the end of March, as the yield on US Treasuries is trading in narrow ranges after moving away from its 14-month ceiling of 1.7760%, reducing the attractiveness of returns of the North American currency.

GRAPH: Projections of the Federal Open Market Committee of the Federal Reserve

Exchange rates in the world


(Reporting by Gertrude Chavez-Dreyfuss, Additional reporting by Ritvik Carvalho in London, Edited in Spanish by Marion Giraldo)

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