The U.S. dollar climbed up against other currencies on Monday. The currency posted its biggest weekly gain in more than a month. Market players closed short positions ahead of a Federal Reserve policy meeting.
In Asia, the dollar added 0.1% to $1.20980 against the euro after hitting an almost one-month high of $1.2093 in the previous session.
On the other hand, the Japanese yen tumbled down by 0.1% to 109.750 per dollar. Before that, the yen had dropped to 109.840 on Friday for the first time since June 4.
The dollar index traded higher by 0.1% at 90.564 today. It skyrocketed to a high of 90.612 on Friday and ended the week with a 0.4% gain.
NAB strategist Jason Wong noted that the greenback repositioning hints at some nerves heading into the FOMC policy update. He referred to the Federal Open Market Committee that plans to meet on Wednesday. Wong also added that more and more investors think that the time to talk about tapering bond purchases has come.
What About the Sterling and Euro?
The British pound plummeted down on Monday due to the new data stating that the U.K. might delay the end of lockdowns as the government tries to slow a rapid rise in coronavirus infections. Against the greenback and the euro, the Sterling dropped down as much as 0.2% in early London trading.
Meanwhile, investors contemplated whether inflationary pressure from an economic reopening would force the FOMC into an earlier tapering of stimulus aid.
Policymakers are reiterating that inflation will be transitory. Their comments have helped calm some of the jitters. However, markets are still expecting new clues from the Federal Reserve on the timing of an end of the ultra-easy policy.
A Deutsche Bank gauge of implied currency market volatility tumbled down to the lowest level since February of last year, plunging by almost 10% since the start of the month.
