Dollar Subdued Ahead Of Fed Monetary Policy

The dollar was mostly lower against major currencies on Tuesday, ahead of the Federal Reserve's monetary policy announcement. The Fed is scheduled to state its policy tomorrow, at the conclusion of its two-day meeting.

The Fed is unlikely to announce any significant policy changes, although traders are still likely to pay close attention to the central bank's assessment of the economic outlook. There are some expectations that the bank will announce some more stimulus plans to help the economy stage a fairly quick recovery.

The Dollar index slipped to a low of 96.23 before recovering to 96.41, but was still down in negative territory, trailing its previous close by about 0.22%.

Against the Euro, the dollar weakened to $1.1339, from Monday's $1.1296. The euro was weak earlier in the day after revised data from Eurostat showed the euro area economy contracted at the fastest pace since 1995 as member countries initiated coronavirus containment measures in March.

The revised estimate published by Eurostat showed. Gross domestic product declined 3.6% sequentially in the first quarter, but slower than the initial estimate of -3.8%. The fall reversed a 0.1% growth logged in the fourth quarter of 2019. On a yearly basis, GDP shrank 3.1%, reversing previous quarter's 1% expansion. The first quarter rate was revised from -3.3% and was the largest fall since the third quarter of 2009.

Data from Destatis showed Germany's exports declined 31.1% year-on-year in April following a 7.7% drop in March. This was the biggest fall since the introduction of foreign trade statistics in 1950. On a monthly basis, the decline in exports deepened to 24%. Economists had forecast a monthly fall of 15.6%.

The Pound Sterling was little changed with a unit of sterling fetching $1.2728, compared to $1.2724 on Monday evening. U.K. retail sales declined in May but at a slower pace as restrictions to contain the spread of coronavirus eased, data from the British Retail Consortium, or BRC, showed Tuesday. Total retail sales decreased 5.9% year-on-year in May, slower than the 19.1% fall in April.

Against the Japanese currency, the dollar was weaker at 107.74 yen, losing ground from 108.42 yen a dollar. The Aussie was weak at US$0.6963, drifting down from US$0.7021. Against the Loonie, the dollar firmed up to C$1.3418 from $1.3382.

Against Swiss franc, the dollar firmed up to CHF0.9509, from CHF0.9567. Switzerland's unemployment rate climbed in May, the State Secretariat for Economic Affairs, or SECO, reported Tuesday. The jobless rate rose to a seasonally adjusted 3.4% in May from 3.1% in April. However, this was well below economists' forecast of 3.7%. On an unadjusted basis, the unemployment rate advanced marginally to 3.4% from 3.3% a month ago.