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Dollar edges up as Fed, U.S. jobs data awaited

The dollar edged higher on Tuesday as the final days of the contentious U.S. presidential campaign overshadowed other major market events, as investors weighed the latest concerns about an FBI investigation into Hillary Clinton's use of a private email server.

The euro was down 0.2 percent at 1.0960 EUR=, while the dollar index was slightly higher at 98.467 .DXY.

Markets see only a small chance that the Fed will raise rates before the election at the conclusion of its two-day meeting on Wednesday, but traders will be scouring its statement for clues as to the timing of its next interest rate increase.

Markets were pricing in around a 78 percent chance the Fed will raise rates in December, but just a 6 percent chance of a hike this week, according to the CME Group's FedWatch Tool.

BOJ keeps policy steady, cuts price forecast

The Bank of Japan held off on expanding stimulus on Tuesday despite pushing back the time frame for hitting its 2 percent inflation target, signaling that it will stand pat unless a severe market shock threatens to derail a fragile recovery.

In a widely expected move, the BOJ maintained the 0.1 percent interest it charges for a portion of excess reserves that financial institutions park with the central bank.

At the two-day policy meeting that ended on Tuesday, it also left unchanged its 10-year government bond yield target around zero percent.

While the BOJ no longer targets the pace of money printing, it maintained a pledge to keep buying government bonds so the balance of its holdings increases at an annual pace of 80 trillion yen.

Board members on Tuesday also updated their economic projections. The median estimates compared with the previous ones, released in July, were as follows:

- Inflation forecast for fiscal 2016 cut to -0.1 percent from 0.1 percent

- Inflation forecast for fiscal 2017 cut to 1.5 percent from 1.7 percent.

- Inflation forecast for fiscal 2018 cut to 1.7 percent from 1.9 percent.

- GDP projection for fiscal 2016 unchanged at 1 percent.

- GDP projection for fiscal 2017 unchanged at 1.3 percent.

- GDP projection for fiscal 2018 unchanged at 0.9 percent.

China Factory Gauge Jumps to Two-Year High, Services Strengthen

China’s official factory gauge rose to the highest since July 2014, led by new orders, suggesting the economy’s stabilization continued into the fourth quarter as robust consumption underpins demand.

With the economy stabilizing this year and factory-gate prices rising for the first time since 2012, policy makers are acting to curb risks from soaring home prices, elevated corporate debt and shadow banking products. Fresh signs of strength may also keep the central bank on hold after keeping the main rate at a record low for a year. Still, manufacturers are being squeezed between rising wage and material costs and anemic global demand.

U.S. dollar likely to drift higher in the year ahead: Reuters poll

The U.S. dollar is likely to drift higher into next year as the Federal Reserve forges a lone but gradual path toward higher interest rates, according to foreign exchange strategists polled by Reuters.

The run-up to and immediate aftermath of the U.S. presidential election on Nov. 8 could still pose some near-term risk to the currency, but a narrow range of forecasts among the bulk of the more than 60 participants surveyed on Oct. 26-31 suggests much of that has already been factored in.

"USD gains are likely to continue ... With the market pricing not even a full hike over the course of 2017, risk-reward is skewed toward the central bank sounding more hawkish, which would push USD higher," wrote Hans Redeker, global head of FX Strategy at Morgan Stanley.

Oil prices rise from one-month lows after OPEC approves strategy

Oil prices edged higher from one-month lows in early trading in Asia on Tuesday after OPEC agreed on a long-term strategy that was seen as an indication the cartel was reaching a consensus on managing production.

But the gains were limited as the market was weighed down by further indications of record output from the group, a sign the glut that has kept a lid on prices is not draining away as fast as the oil bulls would like.

U.S. West Texas Intermediate (WTI) futures CLc1 were up 10 cents at $46.96 a barrel at 0456 GMT. They plunged nearly 4 percent to $46.86 a barrel in the previous session.

Brent LCOc1 for January delivery, the new front-month contract, was up 29 cents at $48.90 a barrel. The previous front-month contract fell nearly 3 percent before expiry on Monday.

Reference: Reuters,Bloomberg