* Dollar Index down 0.2%
* Rebound in risk sentiment pulls sterling higher
(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Jan 26 (Reuters) - The U.S. dollar edged lower
across the board as traders showed a preference for riskier
currencies on Tuesday, a day after worries over vaccine rollouts
and the outlook for U.S. fiscal stimulus boosted demand for safe
havens.
Mounting coronavirus cases and caution ahead of the
conclusion of the U.S. Federal Reserve's policy meeting on
Wednesday have dulled appetite for risk, lending support to the
dollar against a basket of currencies in recent sessions. But
investors were once again nibbling at riskier currencies on
Tuesday.
The U.S. Dollar Currency Index =USD was 0.22% lower at
90.143. The index rose as high as 90.614, its strongest since
Jan. 20, earlier in the session.
The dollar appeared to be taking its cue from overall risk
sentiment in the market, said Michael Brown, senior analyst at
payments firm Caxton, in London.
Data on Tuesday showed U.S. consumer confidence rose
moderately in January amid lingering concerns about the COVID-19
pandemic. "There is also probably a lack of appetite to be buying the
dollar before what's likely to be another dovish Federal Open
Market Committee (FOMC) meeting tomorrow," Brown said.
"Technicals are a little weak as well," he added, noting the
dollar index's failure to break above the 90.50 level for long.
Few if any changes are expected in the Fed's policy
statement on Wednesday after its two-day meeting and no new
economic forecasts are scheduled for release. Despite the dollar's recent rebound from multi-year lows,
speculators in the currency market remain extremely bearish on
the U.S. currency.
Traders are also keenly watching progress on the U.S.
stimulus front after U.S. Senate Majority Leader Chuck Schumer
said Democrats may try to pass much of President Joe Biden's
$1.9 trillion spending package with a majority vote, but it is
not clear if they have the numbers to override Republican
objections. The euro was higher on the day, but gains were muted amid
early signals that the EU economy may not rebound as strongly
this year as predicted. Germany's Ifo business climate indicator
undershot expectations on Monday and an economic surprise index
in Europe .CESIEUR is near six-week lows. EUR=
The Australian dollar AUD=D3 - seen as a liquid proxy for
risk - was 0.52% higher against the dollar; the New Zealand
dollar NZD=D3 was up 0.61%.
Elsewhere, emerging-market currencies saw an easing of
recent selling pressure with the Brazilian real BRL= rising
more than 1%.
The British pound was 0.46% higher, pulling away from a
one-week low against the dollar as rekindled risk appetite in
broader asset markets weakened the U.S. currency. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: World FX rates https://tmsnrt.rs/2RBWI5E
GRAPHIC: Down on the dollar https://tmsnrt.rs/2YfHkRt
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