U.S. Dollar Was Close to its Highest Point

The U.S. dollar or the greenback as many people call it stood just off a one-week high on Tuesday versus a basket of major currencies. It was near a one-week high on expectations of a hawkish Federal Reserve meeting and uncertainty about the omicron variant.

The dollar index which measures the greenback against a basket of major currencies dropped 0.2% to 96,139 by 11:30 GMT.

The Federal Reserve’s two-day meeting will start in several hours. The central bank’s two-day meeting later on Tuesday headlines a string of policy decisions this week. However, while price markets price good odds of a Fed rate hike by June, no moves are expected any time soon from other major central banks. Other central banks are not expected to change their positions. 

Analysts from Westpac think that there is a high bar for the Federal Reserve to surprise hawkishly. Nonetheless, even if the Federal Reserve meets the expectations “they are still streets ahead of the ECB.”

Dollar and other currencies

The euro gained 0.3% to $1.1319 after touching a one-week low of $1.12605 overnight. On Tuesday, Germany’s Ifo Institute predicted the country’s economy to shrink by 0.5% quarter-on-quarter in the fourth quarter. It also expects Germany’s economy to stagnate in the first three months of 2022.

The U.S. dollar was little changed against the Japanese yen. The U.S. currency stood at 113.520.

The British pound advanced 0.3% against the dollar after data showed employers hired a record number of staff in November. 

Meantime, mainland China reported its first Omicron case. Still, the offshore yuan gained 0.12% versus the dollar, bucking a weaker official guidance rate.