EG: Dollar Slips Vs. Yen With Fed Outlook In Sight
By Saumya Vaishampayan and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) -- The U.S. dollar slipped against the Japanese yen Wednesday, ahead of highly anticipated guidance from the U.S. Federal Reserve on what it plans to do with its bond-buying program.
The ICE dollar index (DXY), which tracks the greenback's performance against six rivals, fell to 80.592 from 80.640.
The WSJ Dollar Index , which uses a slightly wider comparison basket, slipped to 72.58 from 72.67.
The U.S. dollar (USDJPY) exchanged hands at 95.07 yen, down from Yen95.30 late Tuesday in North American trade.
The dollar tumbled nearly 3% against the Japanese yen after the Bank of Japan kept its monetary policy unchanged.
In the U.S., the Federal Open Market Committee will release its monetary-policy decision on Wednesday and afterwards Fed Chairman Ben Bernanke will speak to reporters at a news conference. The focus is on when and whether the Fed decides to scale back its $85-billion-a-month bond-buying program. Analysts have said the Fed's bond buying has weighed on the dollar. Read about how markets may react after the Fed decision.
"Most U.S. economists expect the Fed to start reducing its monthly bond purchases later this year, but the wider market view is much more mixed and there are plenty who expect the FOMC to put enough criteria in the way of tapering, to calm markets," Kit Juckes, head of foreign exchange research at Societe Generale, wrote in a note. Read about 7 charts that tell the Fed not to taper QE3
"In our view, the best way the Fed can boost confidence is by showing some themselves," Wells Capital Management chief investment strategist Jim Paulsen said in a report late Tuesday.
"The 'act of tapering' and beginning the process of policy normalization would speak loudly about the Fed's own confidence in the future of this economic recovery," Paulsen wrote.
The euro (EURUSD) was little changed at $1.3391, compared to $1.3398 late Tuesday. The euro reached a level last seen in February with an intraday high of $1.3402 on Tuesday, according to FactSet data.
The British pound (GBPUSD) rose to $1.5661 from $1.5646. Minutes from the Bank of England's monetary-policy meeting released Wednesday showed a unanimous vote to keep rates unchanged, while one-third of members wanted to increase asset purchases. The central bank earlier this month decided to keep its key lending rate at 0.5%, and left the size of its own bond-buying program unchanged.
The Australian dollar (AUDUSD) traded at 95.22 U.S. cents, compared to 95.00 U.S. cents on Tuesday.
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