By Alun John

HONG KONG, (Reuters) – The dollar maintained its gains in early Asia trades on Wednesday. Investors looked forward to a Federal Reserve policy meeting to determine if the Fed would increase market expectations of earlier rate increases next year.

That which rates the greenback in relation to six main peers stood at 96.557 after gaining 0.5% during choppy trading. It’s currently testing the 96.954 level from last week, which would mark a new two-week peak.

These gains were broad-based.

Last month, the euro traded at $1.1265, which is not far from November’s low of $1.1184. This was its lowest level in more than a year. As Britain struggles with increasing cases of Omicron coronavirus, the pound has languished at 1.13326.

But, the Federal Reserve meeting that will wrap up the day later today stood out as the central point in a week of meetings at central banks.

CBA currency strategist Kim Mundy said that currency markets are “taking a small break from Omicron”, even though Omicron was still “very much bubbling away”.

Mundy stated that “it’s difficult for it to become the dominant focal point when there’s the FOMC and Bank of England lining up for policy decisions.”

According to her, traders are keeping an eye on the U.S. Federal Open Market Committee in two ways: Firstly, whether they speed up tapering their bond buying program and Secondly, whether policymakers forward their projected interest rate increases, as part of what’s known as their “dot chart”.

The Fed is expected to end bond-buying in March, and then move on with one or two rate increases in 2022. Markets are anticipating this. [FEDWWATCH]

A Reuters poll revealed that analysts are now reversing their earlier predictions that the Bank of England would raise interest rates on Thursday due to the widespread spread of Omicron throughout Britain. [BOEWATCH]

Markets currently expect the Fed to say it will taper its asset buying by between $25 billion-$30 billion a month from $15 billion currently https://www.reuters.com/business/federal-reserves-taper-how-does-it-work-2021-11-03.

Mundy indicated that the figure on the lower end could result in some dollar weakness.

The trend of declining yens continued, with the currency falling slightly to 113.78 USD. Since late November, Omicron’s first appearance, the Omicron version was introduced as a safe-haven currency.

Australian dollars were unchanged at $0.7107 and Canadian dollars at 1.2854 respectively. This was due to oil prices falling off their recent highs. [O/R]

The Australian currency was being watched closely by investors because China is Australia’s most important trading partner.

At $48,500, it was very modest.