Dollar climbs again ahead of Fed and ECB meetings
The U.S. dollar rose again on Tuesday after rebounding from a dip that nearly wiped out its gains from the day before as markets jostled with the different paths major central banks are choosing between fighting inflation or the economic drag of the pandemic.
The U.S. dollar index measuring the currency against major peers was up 0.2% at 96.5520 in afternoon trading in New York after having earlier given up much of its Monday gain of 0.3%.
The rebound came largely at the euro's expense as markets digested another report of unexpectedly high U.S. inflation that could push American interest rates much higher and sooner than in Europe.
The euro was down more than 0.2% at $1.1256, near a one-week low at 3:39 p.m. ET
The contrast between the monetary policies of the U.S. Federal Reserve and the European Central Bank is driving the euro-dollar exchange rate, said Ron Simpson, global currency analyst at Action Economics in Safety Harbor, Florida.
The Fed will update its policy on Wednesday and the ECB on Thursday.
The Fed and ECB meetings headline a string of policy decisions this week that also will come from the Bank of England, the Swiss National Bank, the Bank of Japan and others.
While money markets are pricing good odds on a Fed rate hike by June , no moves are expected anytime soon from the ECB, BOJ or SNB. And, the Omicron threat could force the BoE to postpone a rate hike.
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