Currency traders await outcome of Fed policy meeting
By Deborah Levine & Myra P. Saefong, MarketWatch
NEW YORK (MarketWatch) -- The dollar recovered from earlier losses Wednesday as the euro headed back toward what would be a one-year low for the single currency.
The dollar index (DXY 82.31, +0.16, +0.19%) , which tracks the greenback against a basket of major currencies, stood at 82.316, a reversal to the upside after having been lower earlier and compared to 82.293 late Tuesday.
The catalyst for the euro's latest retreat was indications by European officials that debt-ridden Greece would receive the amount of financial aid originally stated. Worries also continued to play out in the foreign-exchange market that Greece's debt crisis could worsen and potentially affect other euro-zone countries.
The euro had been higher earlier amid reports that more aid could be coming for Greece from the International Monetary Fund.
The euro (CUR_EURUSD 1.3156, -0.0008, -0.0608%) rose to $1.3210 from $1.3179 in North American trading late Tuesday, but this was still lower than the $1.3357 level seen ahead of credit-rating downgrades announced Tuesday by Standard & Poor's for both Greece and Portugal.
The downgrades touched off sizable selling in financial markets. Read about the downgrades. Read about fears of contagion, restructuring.
Meanwhile, the dollar went for 94.08 Japanese yen (CUR_USDYEN 93.9900, +0.9200, +0.9881%) , up from 93.25 yen late Tuesday.
The euro (CUR_EURYEN 123.6700, +1.0700, +0.8729%) recouped losses, buying 124.25 yen against 122.89 yen late Tuesday.
Keying on Greece
Negotiations over details of the provision of a 45 billion euro rescue plan for Greece should be completed within "a few days," European Central Bank President Jean-Claude Trichet said in a Berlin news conference. IMF Managing Director Dominique Strauss-Kahn added they need to act swiftly and strongly.
The ECB and the IMF are expected to team on a financial package to backstop Greece.
Trichet indicated no deal has been agreed upon, and it's unclear when aid for Greece would be given, said Ashraf Laidi, chief market strategist at CMC Markets.
"Traders are not contented any longer with the promise of a deal but want the disbursement of the money," he said, adding: "There's nothing that will prevent the euro from descending in a three steps down, two steps up kind of fashion."
