The U.S. dollar advanced against its most major counterparts in European deals on Tuesday, as European stocks fell, led by another late-session sell-off in mainland Chinese shares amid growing concerns over capital outflows.
China’s Shanghai Composite index slumped 6.4 percent on concerns about the slowing economy, rising capital outflows, further weakness in the yuan and spikes in onshore short-term borrowing costs ahead of next month’s Lunar New Year holiday.
Investors await the Federal Reserve’s 2-day monetary policy meeting starting today, for more clues about the trajectory of rate hike, amid weakness overseas. The Fed is expected to keep rates at 0.50 percent, following the December rate hike, which was its first since 2006.
Expectations for a March rate hike have been faded, and some market participants anticipate the Fed to signal fewer rate hikes this year than the four implied by the December dot plot.
The currency was trading mixed in Asian deals. While the dollar held steady against the franc and the euro, it rose against the pound. Against the yen, it fell.
The greenback advanced to 1.0819 against the euro, after falling to a 4-day low of 1.0874 at 2:30 am ET. The greenback is likely to locate resistance around the 1.05 zone.
The greenback recovered to 1.0167 against the franc and 118.41 against the yen, from its previous 4-day lows of 1.0117 and 117.66, respectively. The next possible resistance levels for the greenback may be found around 1.025 against the franc and 120.00 against the yen.
On the flip side, the greenback reversed from an early 5-day high of 1.4173 against the pound, with the pair trading at 1.4234. The pair was worth 1.4248 when it ended Monday’s trading.
Markit’s flash U.S. service sector PMI report, U.S. consumer confidence index and U.S. Richmond Fed manufacturing index, all for January and U.S. S&P/Case-Shiller home price index for November are slated for release in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com