SINGAPORE- The dollar nursed losses on Tuesday, after slumping to a two-year low, as investors worry about the damage from the coronavirus to the US economy and await the latest outlook from the Federal Reserve and the passage of a new fiscal rescue package.
The US currency’s drop has put a rocket under gold prices and has the yen standing near its highest in four months, the euro just below a 22-month high and the kiwi close to its strongest since January.
While the moves were modest, they kept pressure on the greenback ahead of the two-day Federal Reserve meeting that gets underway later Tuesday as speculation mounts about a possible shift in policy emphasis – even if no policy change is expected.
“Officials at the Fed have started talking regularly about…allowing inflation to rise above target a bit before tightening,” said Capital Economics’ market economist Oliver Jones.
At the same time the euro’s rise has been unstoppable since European leaders struck a deal for a common debt pool to fund recovery spending in the worst-hit countries.