Dollar slips, lacking direction before Fed meeting

Dollar slips, lacking direction before Fed meeting

LONDON- The dollar slipped slightly on Tuesday, but currency markets generally lacked direction as market participants waited for the U.S. Federal Reserve meeting to set the tone for markets.At the Fed's two-day monetary policy meeting, policymakers are expected to forecast that the U.S. economy will grow in 2021 at its fastest rate in decades, with unemployment falling and inflation rising, but are not considered likely to change their monetary policy. "Markets are in this flux period where they're gripping on to marginal bits of information, but there's nothing to define a new broad dollar trend until we get some more colour from the Federal Reserve tomorrow," said Simon Harvey, FX analyst at Monex Europe."How the Fed delivers their message tomorrow is going to be telling for the dollar," he said. "You're going to start getting the first glimpses of how they interpret an average inflation target.“Investors will also pore over whatever the Fed has to say about the rise in yields, which have gained on bets that economic growth and inflation could prompt a faster-than-expected normalisation of monetary policy."Anything less than a strong message of the Fed being very committed to maintaining favourable financial market conditions will likely see USD advance