Investing.com - The dollar softened against the world's major currencies on Monday as investors sidestepped the greenback ahead of the Federal Reserve's last monetary policy meeting of the year.
Talk the Fed may beef up a current easing program weakened the U.S. currency against its peers.
In U.S. trading on Monday, EUR/USD was up 0.13% at 1.2944.
The U.S. Federal Reserve opens its last monetary policy meeting of the year on Tuesday, and market participants are expecting the U.S. central bank to either stick with current loose policies or possibly loosen them even further.
The U.S. Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery.
Such policy tools weaken the greenback.
The Fed is also running it so-called Operation Twist program, under which the Fed swaps USD45 billion a month in short-term Treasuries for long-termer U.S. government debt.
Unlike quantitative easing, Operation Twist does not expand the Fed's balance sheet.
Operation Twist is due to expire this month, and some market participants avoided the dollar on talk the Fed may let the program end and replace it with even more quantitative easing, which weakened the greenback.
Elsewhere, the euro gained against the dollar, erasing earlier losses sustained when Italian Prime Minister Mario Monti announced that he will resign as soon as Italy passes a 2013 budget.
The announcement came after members of former Prime Minister Silvio Berlusconi’s political party withdrew their support for Monti's caretaker government.
Reports that Berlusconi is planning a comeback rattled nerves somewhat due to concerns over whether or not Monti's policies would hold.
The euro and other higher-yielding currencies, however, gained after market participants digested the news and realized Monti's administration was never designed to be permanent anyway.
Elections may take place in February, arguably not far from when Monti would have called for elections anyway, prompting investors to conclude the euro and other risk-on assets fell too deeply earlier in the session.
The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.20% at 1.6074.
The dollar was down against the yen, with USD/JPY trading down 0.15% at 82.38 and down against the Swiss franc, with USD/CHF trading down 0.17% at 0.9332.
Earlier in Japan, the country's economy watchers current index rose more than expected in November, official data revealed on Monday.
In a report, Cabinet Office said that Japan’s economy watchers current index rose to a seasonally adjusted 40.0, from 39.0 in the preceding month.
Analysts had expected the index to rise to 39.7 last month.
The dollar was weaker against its cousins in Canada, Australia and New Zealand, with USD/CAD trading down 0.20% at 0.9866, AUD/USD up 0.03% at 1.0491 and NZD/USD trading up 0.25% at 0.8346.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% at 80.45.
Later Tuesday, the U.S. and Canada are to publish a government reports on the trade balance, the difference in value between imports and exports.
Talk the Fed may beef up a current easing program weakened the U.S. currency against its peers.
In U.S. trading on Monday, EUR/USD was up 0.13% at 1.2944.
The U.S. Federal Reserve opens its last monetary policy meeting of the year on Tuesday, and market participants are expecting the U.S. central bank to either stick with current loose policies or possibly loosen them even further.
The U.S. Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month from banks on an open-ended basis to spur recovery.
Such policy tools weaken the greenback.
The Fed is also running it so-called Operation Twist program, under which the Fed swaps USD45 billion a month in short-term Treasuries for long-termer U.S. government debt.
Unlike quantitative easing, Operation Twist does not expand the Fed's balance sheet.
Operation Twist is due to expire this month, and some market participants avoided the dollar on talk the Fed may let the program end and replace it with even more quantitative easing, which weakened the greenback.
Elsewhere, the euro gained against the dollar, erasing earlier losses sustained when Italian Prime Minister Mario Monti announced that he will resign as soon as Italy passes a 2013 budget.
The announcement came after members of former Prime Minister Silvio Berlusconi’s political party withdrew their support for Monti's caretaker government.
Reports that Berlusconi is planning a comeback rattled nerves somewhat due to concerns over whether or not Monti's policies would hold.
The euro and other higher-yielding currencies, however, gained after market participants digested the news and realized Monti's administration was never designed to be permanent anyway.
Elections may take place in February, arguably not far from when Monti would have called for elections anyway, prompting investors to conclude the euro and other risk-on assets fell too deeply earlier in the session.
The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.20% at 1.6074.
The dollar was down against the yen, with USD/JPY trading down 0.15% at 82.38 and down against the Swiss franc, with USD/CHF trading down 0.17% at 0.9332.
Earlier in Japan, the country's economy watchers current index rose more than expected in November, official data revealed on Monday.
In a report, Cabinet Office said that Japan’s economy watchers current index rose to a seasonally adjusted 40.0, from 39.0 in the preceding month.
Analysts had expected the index to rise to 39.7 last month.
The dollar was weaker against its cousins in Canada, Australia and New Zealand, with USD/CAD trading down 0.20% at 0.9866, AUD/USD up 0.03% at 1.0491 and NZD/USD trading up 0.25% at 0.8346.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% at 80.45.
Later Tuesday, the U.S. and Canada are to publish a government reports on the trade balance, the difference in value between imports and exports.