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FOREX-Dollar on front foot as traders look to Fed for direction

    * Greenback holds on to biggest weekly gain in a month
    * Traders look to FOMC meeting for clues on taper timing
    * FX market volatility dives to lowest since Feb. 2020

    By Kevin Buckland
    TOKYO, June 14 (Reuters) - The U.S. dollar edged up against
major currencies on Monday, after posting its biggest weekly
gain in more than a month, as traders closed short positions
ahead of a much-anticipated Federal Reserve policy meeting.
    The greenback gained 0.1% to $1.20980 against the euro
 in Asia, after touching an almost one-month top of
$1.2093 in the previous session.
    The yen fell 0.1% to 109.750 per dollar, after
weakening to 109.840 on Friday for the first time since June 4.
    The dollar index, which measures the U.S. currency
against six rivals, was 0.1% stronger at 90.564. It reached a
high of 90.612 on Friday, finishing the week with a 0.4% gain.
    "The dollar repositioning shows some nerves heading into the
FOMC policy update," NAB strategist Jason Wong wrote in a note,
referring to the Federal Open Market Committee that will meet
over two days to Wednesday.
    "Over the past month there appears to have been a growing
chorus that the time to talk about tapering bond purchases had
been reached," Wong added.
    Dollar direction has been driven in recent weeks by
fluctuating bets on whether inflationary pressure from an
economic reopening could force the FOMC into an earlier tapering
of currency-depreciating stimulus. 
    Repeated comments by policy makers that inflation would be
transitory have helped calm those jitters, but markets are now
expecting new clues from the Fed on the timing of an exit from
ultra-easy policy.
    Caution ahead of the Fed meeting has pushed a Deutsche Bank
gauge of implied currency-market volatility to the
lowest since February of last year, dropping around 10% since
the start of the month.
    In the week ended June 8, speculators wound up net dollar
short positions to the highest in nearly three
months at $18.35 billion.
    "While we acknowledge the uncertainty around tapering given
the recent noise in data, we think that risks for USD ... remain
somewhat asymmetric and skewed to the upside, though the pace of
appreciation will likely be somewhat contingent on near-term Fed
rhetoric," Morgan Stanley analysts wrote in a research report.
    In cryptocurrencies, bitcoin traded around
$39,000 after getting an almost 10% lift on Sunday, when Tesla
Inc CEO Elon Musk tweeted that the electric carmaker
will resume allowing bitcoin transactions when miners who verify
transactions use more renewable energy.
    The digital token has fluctuated on either side of $35,000
over the past month, dipping to near $31,000 at one point last
week. It was at a record high of $64,895.22 just two months ago.
    Rival ether remained stuck around $2,500, the
middle of a narrowing trading range spanning the past month.
    
========================================================
    Currency bid prices at 0515 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar                  $1.2102        $1.2109     -0.05%         -0.95%      +1.2112     +1.2095
 Dollar/Yen                   109.7450       109.6600    +0.09%         +6.26%      +109.8250   +109.7300
 Euro/Yen         <EURJPY=EB  132.81         132.79      +0.02%         +4.64%      +132.9100   +132.7500
                  S>                                                                            
 Dollar/Swiss                 0.8990         0.8980      +0.11%         +1.61%      +0.8991     +0.8978
 Sterling/Dollar              1.4109         1.4114      -0.02%         +3.28%      +1.4118     +1.4096
 Dollar/Canadian              1.2151         1.2170      -0.16%         -4.58%      +1.2168     +1.2149
 Aussie/Dollar                0.7710         0.7707      +0.05%         +0.24%      +0.7712     +0.7694
 NZ                           0.7144         0.7128      +0.23%         -0.52%      +0.7146     +0.7130
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Volatilities 
Tokyo Forex market info from BOJ 

    
 (Reporting by Kevin Buckland; Editing by Himani Sarkar)
  
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