The U.S. dollar edged higher against major rivals, including moving off its one-month low against the Japanese yen, as the Federal Reserve prepared to start a two-day monetary-policy meeting. The ICE dollar index , a gauge of the greenback's movement against six other major currencies, rose to 81.711, up from 81.663 late Monday in North America. The WSJ Dollar Index , which measures the currency's moves against a slightly wider basket, sat at 73.92, almost flat from Monday's 73.91 level. The euro bought $1.3260, little changed from $1.3263, while the British pound fell to $1.5339 from $1.5349. The Australian dollar turned lower, dropping to 91.02 U.S. cents to lose a full penny from late Monday's level of 92 cents. Roughly half of those losses came after Reserve Bank of Australia Gov. Glenn Stevens said in a speech that the current pace of inflation wouldn't deter the central bank from cutting interest rates further. The ICE dollar index had lost more than 3% since hitting its most recent high on June 9. The pullback was spurred by speculation about when the Fed will begin tapering its bond purchases and by subsequent comments from Fed Chairman Ben Bernanke about interest rates staying low for an extended period. "We believe the sustainability of the recovery in the U.S. economic activities will still require accommodative monetary policies in place to support growth," analysts at Prime Holding wrote Friday. Monetary stimulus has been seen as weighing on the dollar's value. The Fed's policy statement was due out Wednesday, and investors will likely look for any signs about the eventual wind-down of the central bank's stimulus. Later Tuesday, reports on U.S. home prices and consumer confidence are due to be released. Against the Japanese currency, the dollar traded at ¥98.03 compared up modestly from ¥97.84 late Monday, when the dollar traded at its lowest level against the yen since June 26, according to FactSet data. "The pair continues to trade heavy after failing at the ¥100 level, as investors remain cautious about Fed's tapering plans, as well as concerned about Japan's efforts at fiscal reform," BK Asset Managment managing director Boris Schlossberg wrote in an note Monday. Over the weekend, Japan's prime minister indicated he could scale down plans for a sales-tax hike. On Tuesday, meanwhile, the Japanese government released reports showing industrial production unexpectedly dropped in June and consumer spending also missed expectations. The reports followed Monday's release that Japanese retail sales rose a less-than-expected 1.6% in June from the year-earlier period. Japanese Prime Minister Shinzo Abe "has to walk a fine line between assuring investors that proper fiscal reforms will take place to mitigate the country's massive $5 trillion debt, while at the same time he must pursue an aggressive expansionist policy in order to continue stimulating the economy," said Schlossberg. "This conflict has caused a retrenchment among [dollar-yen] longs, and the pair remains under pressure for the time being," he said. Source : Marketwatch
