Dollar Turns Weak Against Peers Ahead Of Fed Policy

(RTTNews) - After staying weak during the Asian and European sessions, the U.S. dollar recovered some lost ground on Tuesday, but moved in a tight band around the flat line as traders stayed cautious, looking ahead to the Federal Reserve's monetary policy announcement.

The Fed, which is set to announce its rate decision tomorrow, is widely expected to raise interest rate by 75 basis points.

However, there is some optimism the central bank will signal plans to slow the pace of rate hikes at upcoming meetings.

Investors also digested a slew of economic data. A report from the Labor Department showing a jump in U.S. job openings in the month of September.

A separate report released by the Institute for Supply Management showed a slight increase in U.S. manufacturing activity in the month of October.

The ISM said its manufacturing PMI edged down to 50.2 in October from 50.9 in September, but a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 50.0.

A report from the Commerce Department showed construction spending in the U.S. unexpectedly showed a modest increase in the month of October, inching up by 0.2 percent to an annual rate of $1.811 trillion, after falling by 0.6 percent to a revised rate of $1.807 trillion in August. Economists had expected construction spending to decrease by 0.5 percent.

The dollar index, which dropped to a low of 110.72, rallied and hit a high of 111.78 a little past noon, but pared gains and dropped to 111.55, up just marginally from the previous close.

Against the Euro, the dollar was up marginally at 0.9874 a little while ago.

The dollar is weak against Pound Sterling, having dropped to 1.1482. The currency, which was down sharply at 1.1467 a unit of Sterling in the early New York session, pared most of its losses as the session progressed.

Against the Japanese currency, the dollar weakened to 148.21 yen, down from the previous close of 148.74 yen.

Against the Aussie, the dollar is roughly flat at 0.6394. The Reserve Bank of Australia today raised its benchmark lending rate by 25 basis points, as widely expected. The bank reiterated that policymakers expect to increase interest rates further over the period ahead.

The Swiss franc firmed to 0.9915 a dollar in the European session, but pared most of its gains as the day progressed and was last seen at 1.0004 a dollar.

The dollar is up slightly against the Loonie at C$1.3634.