FOREX-Dollar pauses as Fed speakers suggest caution on rate cuts

By Gregor Stuart Hunter and Jaspreet Kalra

SINGAPORE, Sept 23 (Reuters) - The U.S. dollar was steady on Tuesday as investors took a beat to parse a hawkish tilt in comments by members of the Federal Reserve, while awaiting remarks on the economic outlook by Chair Jerome Powell.

The greenback fluctuated between gains and losses, last trading flat after snapping a three-day winning streak on Monday, with the U.S. dollar index =USD last at 97.36.

The euro EUR=EBS was a touch lower at $1.1795 while sterling GBP=D3 was flat at $1.3512.

Investors are assessing the impact of U.S. President Donald Trump's economic policies on the health of the global economy and the implications for Fed policy ahead of the release of core personal consumption expenditures (PCE) data later this week.

Powell will speak on the economic outlook later on Tuesday and some central bank policymakers renewed focus on inflation risks in remarks on Monday, prompting a slight easing of wagers on a rate cut by the Fed next month.

It does not seem likely that Powell will "diverge much from last week's press conference comments, and we think markets may be more interested in hearing other FOMC (Federal Open Market Committee) members' opinions at this stage anyway," said Francesco Pesole, FX strategist at ING.

Money markets are currently pricing in a near-90% chance of a rate cut in October, down slightly from 92% a day earlier, per CME's FedWatch tool. Congressional funding talks this week to avert a government shutdown on September 30 have added to market jitters.

"It's a slightly hawkish tone from Fed speakers that has given people a little bit of pause for thought," said Tony Sycamore, market analyst at IG in Sydney.

Against the yen, the dollar was flat at 147.775 yen JPY=EBS but gained slightly against the Swedish crown SEK=D3 after the Riksbank cut benchmark borrowing costs to 1.75% and said rates were expected to remain on hold for some time.

Markets showed a largely muted reaction to a mixed bag of business survey readings in Europe.

While data showed that euro zone business activity grew at its fastest pace in 16 months in September, it also pointed to French economic activity contracting the same month at the sharpest rate since April.

Among other currencies, the dollar sank 4.5% against Argentina's peso ARS= after U.S. Treasury Secretary Scott Bessent said on Monday that "all options" were on the table for stabilising Argentina, including swap lines and direct currency purchases.

He added no steps would be taken until after he and Trump meet with Argentine President Javier Milei in New York on the sidelines of the United Nations General Assembly on Tuesday.

The Indian rupee weakened to an all-time record low of 88.7925 against the U.S. dollar on Tuesday, pressured by the U.S. visa fee hike, muted foreign equity flows and a pick-up in hedging.

The offshore yuan traded unchanged at 7.1162 yuan per dollar CNH= as some major state-owned banks purchased dollars in what investors viewed as an attempt to slow the pace of the local currency's appreciation.

Gold XAU= hit a fresh record high of $3,759.02 per ounce before paring gains.