TOKYO- The dollar languished near multi-month lows versus major peers on Tuesday as traders pondered the prospects for early policy normalization by the Federal Reserve ahead of a key jobs report at the end of the week.
The British pound rallied to a three-month peak at $1.425 while Canada’s loonie hovered near a six-year top, amid market expectations for policy tightening in those countries.
Australia’s dollar rose for a second day to as high as $0.77605 ahead of a central bank announcement on Tuesday, although economists predict no change to monetary policy.
The offshore Chinese yuan edged back toward a three-year high of 6.3526 per dollar reached Monday, last trading at 6.3640, paring a retreat spurred by the monetary authority’s tightening of banks’ FX requirements to stem the currency’s rise.
The dollar index, which tracks the greenback against six peers, was back below 90 from as high as 90.447 on Friday, when a measure of US inflation closely watched by the Fed posted its biggest annual rise since 1992. The gauge sank 0.3 percent on Monday, in a market thinned by US and British holidays.
Fed officials, led by Chair Jerome Powell, have said repeatedly they expect price pressures to be transitory and monetary stimulus to stay in place for some time, but investors are wary that a strong pandemic recovery could force the Fed’s hand.
