(RTTNews) - The US dollar lacked a clear direction on Monday ahead of this week's key FOMC meeting as traders look ahead to Fed Chairman Ben Bernanke that the FOMC would come with additional measures to support the struggling economy.
Most economists do not expect the Fed to announce additional quantitative easing at the September meeting on the basis of arguments that the Fed would continue its "Operation Twist" program until the end of the year.
Last week, the Labor Department reported that monthly non-farm payrolls numbers rose a weaker than expected 96,000 in August from a downwardly revised 141,000 growth in July. Private sector job growth also slowed to 103,000 in August from 162,000 in July.
Downbeat data from the U.S. and China were not at all risk-generative, which eventually lead some safe-haven buying, although some crisis worries eased in Europe after the European Central Bank chief Mario Draghi announced new outright monetary transactions or purchases of sovereign bonds of 1 to 3 year maturities last week.
China's exports rose 2.7 percent year-on-year in August, slightly weaker than the 2.9 percent growth forecast by economists. Meanwhile, imports recorded a 2.6 percent year-on-year decline against expectations for a 3.5 percent gain. The trade balance showed a surplus of $26.66 billion compared to expectations for a surplus of $19.5 billion.
Over the weekend, data showed that China's inflation accelerated from a 30-month low in August, while a weaker-than-expected industrial output growth put pressure for more stimulus.
Japan's gross domestic product added just 0.2 percent in the second quarter of 2012 compared to the previous three months, suggesting that the recovery from the March 2011 earthquake and tsunami remains stuck in neutral.
The headline figure was down from last month's preliminary reading of 0.3 percent, and it was significantly lower than the 1.2 percent gain in the first quarter.
Although Friday's heavy-selling took a pause on Monday, the USD/JPY is still in the brim of bear-flows under the key 78.0 level. Resistance-turned-support line is visible around the 79.90 level and a fall below this area could point out to next major demand zone at 76.0.
Confidence among Japanese consumers increased unexpectedly in August, data from the Cabinet Office showed today. The seasonally adjusted consumer confidence index rose to 40.5 in August from 39.7 in July. Economists expected the index to fall to 39.4.
The USD/CHF pair seesawed in narrow ranges between 0.9486 and 0.9445 after having re-tested a key demand zone of 0.9425/35 area in post-NFP free-fall on Friday. Bias for a potential reversal or a resumption of bear-run would likely be based on upcoming events risks.
