Dollar Edges Higher, Paring Losses

The dollar rose modestly during Asian hours Wednesday to pare the previous day’s losses, but with moves muted ahead of a key German court ruling and a Federal Reserve meeting in the U.S.

The ICE dollar index DXY, which measures the greenback against a basket of six other major currencies, reached 79.877, up from 79.866 in late North American trading Tuesday.

The dollar fell to its lowest level in four months Tuesday after Moody’s Investors Service said the U.S. runs the risk of losing its triple-A rating by next year. Read more on currencies.

Additionally, the Federal Reserve is slated to start its two-day policy meeting later in the global trading day amid growing speculation that it will introduce more measures to stimulate the U.S. economy.

“It seems that investors are becoming more convinced about the idea that the Fed may initiate another round of quantitative easing on Thursday,” said currency strategists at BNP Paribas.

With a German court ruling on the legality of the euro zone’s permanent bailout fund also due Wednesday, the euro EURUSD  traded at $1.2861, up slightly from $1.2857 in late North American trading.

“Political risks may linger, but market-systemic risks have significantly abated, given the European Central Bank’s readiness to act. We continue to remain bullish on euro,” said the BNP strategists.

The British pound GBPUSD edged up to $1.6074, from $1.6067 late Tuesday.

Against the Japanese yen USDJPY, the dollar traded at ¥77.84, rising from ¥77.70 Tuesday.

The Australian dollar AUDUSD advanced to $1.0469, from $1.0435 in late trading the previous day.

Marketwatch