Geoffrey Smith 

Investing.com — The dollar pushed higher in early dealings on Tuesday, as the violent snap back in U.S. stocks in the second half of Monday’s trading failed to convince global markets that the recent volatility has run its course.

The index was pushed back to a two week high by risk aversion across the equity and commodity markets of Asia and Europe. By 3:00 AM ET (0800 GMT), the index which measures the greenback’s performance against a basket developed-market currencies was 0.1% higher at 95.995

It was the least strong of all major currencies with a 0.2% drop to $1.1305. However, it continued its losses in narrower ranges. After disclosures from another party in 10 Downing Street, Boris Johnson, beleaguered Prime Minster, was under pressure. Sterling was also hit by figures that showed a larger-than-expected December government borrowing requirement.

As the U.S. Federal Reserve opens its two-day policy session, ranges are expected to remain narrow. The focus of the press conference by Chairman Jerome Powell on Wednesday will be on his guidance. The Fed isn’t widely expected to change its policy settings, but its ‘dot plot’ and Powell’s comments will indicate whether the central bank feels it needs to speed up the process of withdrawing stimulus.

Prior to that, Europe’s focus will be on Germany’s business confidence index at 4:00 AM ET (0900 GMT). The for January had risen surprisingly strongly last week, while IHS Markit’s also pointed to a bright start to the year for Europe’s biggest economy. But, the Ifo survey provides the most accurate and detailed guide for economic trends.

Deutsche Bundesbank on Monday warned of the economic slowdown in the fourth quarter. This was despite the fact that industry has been facing chip shortages for long periods and a new wave of Covid-19 since December.

Also of interest later will be the Hungarian central bank’s regular meeting. After raising its key rate by 0.9% in six previous monthly meetings, the NBH expects to maintain it at 2.40%. This seemed to have stopped the gradual decline in the second half 2021. It has been under pressure by volatility from the U.S. and lost 2.5% to the euro over the past two weeks.

The struggle for Central European currencies continues with the regional association with Ukraine. There has not been any significant change overnight. Polish currencies fell by 0.4% against the Euro to reach a new year low. However, the currency recovered some from the sharp selloff Monday and traded at 78.83 per dollar.