* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, April 28 (Reuters) - The U.S. dollar drifted higher
on Wednesday as investors moved to the sidelines ahead of a U.S.
Federal Reserve policy statement and a speech by Joe Biden later
in the day where the U.S. president is set to announce more
stimulus plans.
Though the greenback recovered from a one-month low hit
earlier this week, investors expect the U.S. central bank to
maintain its policy settings and Fed Chairman Jerome Powell is
seen as likely to repeat his dovish message. While currency markets were generally calm, signs of
nervousness were evident in the bond markets where yields
US10YT=RR on 10-year U.S. Treasury notes rose above 1.60%
after tepid auction results. US/
With the consensus broadly that the Fed will remain on hold,
any small shift in rhetoric could trigger an outsized move in
markets.
The dollar index rose 0.2% at 91.047 =USD , bouncing from
Monday's low of 90.679, its weakest level since March 3, though
investors were not convinced a recent downtrend had ended.
"The Fed has been fighting a rearguard action against calls
for higher rates in the face of extremely strong data and the
prospects of more stimulus, and most likely they will keep the
same phrasing as before," said John Marley, CEO of forexxtra, a
London-based FX consultancy.
Investors' inflation expectations, measured by the
break-even inflation rate calculated from U.S. inflation-linked
bonds US10YTIP=TWEB , rose above 2.40% on Tuesday, the highest
level since 2013.
The euro slipped 0.2% to $1.2070 EUR=EBS , off Monday's
two-month high of $1.2117.
The dollar stood at 108.97 yen JPY=EBS , having jumped
0.59% overnight and extending its recovery from a seven-week low
of 107.48 touched last week, in tandem with rises in U.S. bond
yields.
Biden is expected to roll out a plan to raise taxes on the
wealthiest Americans, including the largest-ever increase in
levies on investment gains, in order to fund about $1 trillion
in childcare and other social spending. Elsewhere, the Australian dollar AUD=D4 dropped 0.3% to
$0.77415 after the country's consumer price index came in weaker
than expected. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
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