* Dollar Index down 0.2%
* Rebound in risk sentiment pulls sterling higher
(New throughout, updates prices, market activity, comments to
U.S. market open; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Jan 26 (Reuters) - The U.S. dollar fell across the
board as riskier currencies found a firmer footing 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 U.S.
Federal Reserve's policy meeting this week has 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 0.19% lower at
90.173. 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.
Few if any changes are expected to the Fed's policy
statement on Wednesday after its two-day meeting and no new
economic forecasts are scheduled to be released. 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 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=
On Tuesday, the Australian dollar AUD=D3 - seen as a
liquid proxy for risk - was 0.48% higher against the dollar; the
New Zealand dollar NZD=D3 was up 0.65%.
Elsewhere, emerging-market currencies saw an easing of
recent selling pressure with the Brazilian real BRL= rising
more than 1%.
Sterling pulled away from a one-week low against the dollar
and also gained ground against the euro as rebounding risk
appetite in broader asset markets weakened the U.S. currency.
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GRAPHIC: World FX rates https://tmsnrt.rs/2RBWI5E
GRAPHIC: Down on the dollar https://tmsnrt.rs/2YfHkRt
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