Dollar eases as focus turns to Fed, cryptocurrencies jump

[July 26, 2021]  By Ritvik Carvalho

LONDON (Reuters) - The dollar slipped against a basket of currencies on Monday as investors turned their focus to this week's Federal Reserve meeting and cryptocurrencies jumped to their highest levels in weeks.

The euro ticked 0.2% higher to $1.1795. German business morale fell unexpectedly in July on continuing supply chain worries and rising coronavirus infections, a survey showed on Monday.

The Ifo institute said its business climate index fell to 100.8 from a revised 101.7 in June. A Reuters poll of analysts had pointed to a July reading of 102.1.

The yen gained as much as 0.4% to 110.11 yen per dollar.. Sterling gained against the dollar and the euro as coronavirus infections in Britain receded for now. [GBP/]

The dollar index, which measures the currency against six major peers, slipped 0.2% to 92.688 under pressure from the euro and yen, but was still close to last week's 3-1/2-month high of 93.194.

It has gained nearly 4% from a low on May 25 as an improving U.S. economy bolstered the outlook for the Fed to start paring asset purchases as early as this year.

"We think that the Fed will have detailed tapering discussions, but without providing any concrete guidance and short of a taper warning or decision," CitiFX analysts Ebrahim Rahbari and Lenny Jin wrote in a note to clients.

They added that there were risks for a slightly later announcement of a taper decision from the Fed - for example, out to the fourth quarter - given the uncertainty associated with the Delta variant of the coronavirus.

The Fed at its last meeting on June 16 dropped a reference to the coronavirus as a drag on the economy.

"Given the policy divergence between the Fed and a staunchly dovish ECB, we see euro/dollar as broadly range-bound, but that this environment does not point to dollar strength," the CitiFX analysts said.

The U.S. data calendar is light, with the focus on the Dallas Fed Manufacturing Activity index, which is expected to have gained in July.

Cryptocurrency Bitcoin jumped by as much as 10% to a more than five-week high of $39,850, while ether gained 7.35% to $2,353 after London's City A.M. newspaper cited an un-named insider at the weekend as saying Amazon is looking to accept bitcoin payments by year-end.

The report followed Twitter boss Jack Dorsey's comment on Friday that the digital currency is a "big part" of the social-media company's future.

(Reporting by Ritvik Carvalho, additional reporting by Kevin Buckland in Tokyo; Editing by Emelia Sithole-Matarise and Barbara Lewis)

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