2021.06.1520:28:00UTC+00Dollar Pares Early Gains As Traders Look Ahead To Fed Policy

After gaining notable ground against its major rivals in the European session, the U.S. dollar pared its gains against most of the currencies on Tuesday, with traders looking ahead to the Federal Reserve's policy.

It is widely expected that the Fed won't make any changes to monetary policy but could signal that it is beginning to think about scaling back its asset purchases.

The focus will be on Fed Chair Jerome Powell's comments about the strength of the economic recovery and tapering of the bank's bond buying program.

In economic news today, a report from the Labor Department said that the producer price index for final demand advanced by 0.8% in May after climbing by 0.6% in April. Economists had expected another 0.6% increase.

Compared to the same month a year ago, producer prices in May were up by 6.6%, reflecting the largest increase since 12-month data were first calculated in November 2010.

The Commerce Department also released a report showing retail sales tumbled by more than expected in the month of May, falling by 1.3% following an upwardly revised 0.9% increase in April. Economists had expected retail sales to slump by 0.8% compared to the unchanged reading originally reported for the previous month.

The Fed also released a report showing industrial production climbed 0.8% in May after inching up by a revised 0.1% in April.

The dollar index, which rose to 90.68 from a low of 90.35, was last seen at 90.52, its previous close.

Against the Euro, the dollar weakened to $1.2130, after advancing to $1.2103 in the European session.

The Pound Sterling was weak, fetching $1.4084 a unit, compared with $1.4108 Monday evening.

Against the Yen, the dollar was flat, fetching 110.06 a dollar, after moving in a very tight range between 109.99 and 110.77.

Against the Aussie, the dollar firmed to 0.7686, gaining nearly 0.35% from 0.7712.

The Swiss franc strengthened to 0.8983 a dollar, firming from 0.8999, buoyed by an upward revisioin Switzerland's growth forecast for the current year and the next.

The greenback firmed against the Loonie, fetching C$1.2184 a unit, up more than 0.3% from Monday's close of C$1.2144.