NEW YORK, Jan 25 — The dollar edged higher today to within striking distance of its two-week peak, as investors bought safe-haven currencies amid tensions between Russia and the West over Ukraine while awaiting the outcome of the Federal Reserve’s policy meeting.

The US military put about 8,500 troops on alert to be ready to deploy to Europe if needed, in the latest effort to reassure jittery Nato allies in the face of a Russian military build-up near Ukraine.

“Much greater exposure of European economies to the crisis does not make the euro a particularly attractive vehicle to ride out the current storm,” ING analysts said.

The euro was down 0.2 per cent at 0848 GMT to US$1.1300, trading just off its lowest since December 20 touched yesterday.

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The dollar index was 0.1 per cent higher at 96.02, just off its two-week high of 96.135 hit yesterday.

The safe-haven yen gained 0.3 per cent versus the euro and 0.1 per cent against the dollar, remaining within striking distance of its one-month highs.

The Swiss Franc was down 0.1 per cent versus the euro at 1.0366, but not far from its highest since 2015, hit recently at 1.0298.

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The Fed could firm up plans to raise rates and shrink its holdings of US Treasury bonds and mortgage-backed securities that have swollen its balance sheet past US$8 trillion (RM33 trillion) at its meeting that ends on Wednesday.

Analyst views about the meeting are mixed, with Deutsche Bank flagging a potentially hawkish surprise over the months ahead, with the possibility the Fed raises rates in March and increases them as many as six or seven times this year.

But ING analysts say that if the Fed’s balance sheet reduction does the heavy lifting of policy normalisation, that could scale back forecasts for the number of rate hikes.

According to Commerzbank, “the markets are likely to remain nervous in the run-up to tomorrow’s meeting, but we do not expect any new insights.”

Money markets are pricing an 85 per cent chance of a 25 basis point Fed hike in March and three more to 1.0 per cent by year-end.

Bitcoin, which has almost halved in value since touching a US$69,000 record in November, lost 2 per cent to trade around US$36,089. Meanwhile, ether, the world’s second-largest cryptocurrency, was down 2.7 per cent at US$2,377. — Reuters