MW: U.S. dollar recoups lost ground against rivals
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) — The U.S. dollar in Asia’s afternoon trading Tuesday recouped some of the ground it lost recently against currency rivals ahead of the U.S. Federal Reserve’s decision on interest rates due out later in the global trading day.
U.S. central bank monetary policy announcements “have the potential to cause turbulence in the currency market, but this week’s meeting is one that may pass quietly,” said Kathy Lien, director of currency research at GFT, in a note to clients.
“Last month’s decision to increase stimulus received a tremendous amount of criticism by U.S. politicians and only recently has attention diverted away from monetary policy and onto fiscal policy,” she said. So “having spent too much time defending their recent policy actions, [Fed Chairman Ben] Bernanke has no interest in shifting attention back to the Federal Reserve.”
Even so, Richard Hastings, a strategist at Global Hunter Securities, said “the next wave of strong yen conditions” could come ... when the Fed says something about inflation and more purchases of U.S. treasury debt.”
Ahead of the rate decision, the dollar index (DXY 79.26, -0.02, -0.03%) , a measure of the greenback’s performance against a basket of six other currencies, edged up to 79.330 from 79.281 in late North American trading Monday. See more tools and data on currency trading.
Against the yen, the dollar (USDYEN 83.4500, +0.0200, +0.0240%) rose to ¥83.45, up from ¥83.40 Monday. The euro (EURUSD 1.3408, +0.0022, +0.1643%) fell to $1.3385 from $1.3403 Monday. See Monday’s currencies story.
