Dollar stands tall in big week for FX markets
A U.S. one dollar banknote is seen in front of displayed stock graph in this illustration taken May 7, 2021. REUTERS/Dado Ruvic/Illustration
The dollar consolidated gains on Monday after posting its biggest weekly rise in six weeks as traders cut their bearish bets before a much-anticipated Federal Reserve meeting that might signal a change in the outlook for U.S. monetary policy.
The U.S. central bank begins a scheduled two-day policy meeting on Tuesday. Recent data pointing to a surge in inflation has raised concerns that price pressures following the post-COVID economic reopening could force policymakers into an earlier tapering of currency-depreciating stimulus.
While consensus expectations are the Fed will remain on hold until 2023, some believe the failure of the dollar to weaken in recent days despite inflation-adjusted U.S. bond yields softening further signals a broader caution among investors.
“Market participants are wary of…
