Dollar keeps tight ranges ahead of Fed, jobs data

US dollar rate index news: The dollar held narrow ranges against its major peers on Tuesday, as traders awaited the Federal Reserve's monetary policy decision for clues on when the US central bank might cut rates.

In the meantime, jobs opening data from the US Department of Labor Statistics due later in the day will act as a preview to the closely watched payroll report to be released on Friday.
The dollar was steady in the Asian morning, with market participants moving cautiously ahead of the two-day FOMC meeting that kicks off on Tuesday.

While the Fed is expected to hold interest rates, the focus on the tone that Fed Chair Jerome Powell strikes at the press conference on Wednesday and any hints of rate cuts in the near future.
Markets are currently pricing in a 46.6 per cent chance that the US central bank will begin cutting in March, dropping from 73.4 per cent a month ago, according to the CME Group’s FedWatch Tool, as data reinforces views that economic growth remains solid.

"I suspect that the FOMC meeting will not be as dovish as current market pricing suggests," said Matt Simpson, senior market analyst at City Index. "If recent Fed comments are anything to go by, the Fed are unlikely to release a dove into the crowd - and that risks a bounce for the US dollar and yields."

US job opening figures on Tuesday will kick off a week of domestic jobs data, culminating in a key US payrolls report for January on Friday. The data will give another indication of whether the world's largest economy remains strong after the Fed's aggressive hiking campaign.

The euro zone will also offer another peek under the economic hood with flash GDP data for the fourth quarter published on Tuesday, but expectations are for a much weaker outlook than its American counterpart.

Meanwhile, European Central Bank policymakers on Monday disagreed on the exact timing of a cut or the trigger for action, although that hasn't stopped traders from fully pricing a move in April. The euro was mostly unchanged at $1.0838.

Sterling was last trading at $1.2716, holding firm ahead of the Bank of England's monetary policy meeting this week. Elsewhere, the dollar gave up 0.15 per cent against the yen at 147.24 per greenback.

Japan's jobless rate fell to 2.4 per cent in December from the previous month, government data showed on Tuesday, just under economists' median forecast of 2.5 per cent in a Reuters poll.
"From the BOJ (December) minutes, policymakers are increasingly confident about the investment outlook due to higher corporate profitability, though there is still lingering uncertainty on the pace of wage gains," said Wei Liang Chang, currency and credit strategist at DBS.

"An adjustment to NIRP (negative interest rate policy) is thus more likely in Q2 following the spring wage negotiations, and dollar/yen would be more driven by the Fed than any expectations of a policy shift by the BOJ in the short-term." In cryptocurrencies, bitcoin rose 0.22 per cent to $43,275.63.