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Dollar holds firm ahead of Fed meeting outcome

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(Globalpost/GlobalPost)

The dollar held firm in Asia Wednesday as investors kept to the sidelines as the US Federal Reserve concludes its policy meeting, with focus on its statement for clues to the future of its stimulus programme.

In afternoon trade the greenback changed hands at 98.03 yen, little changed from 98.02 yen in New York Tuesday afternoon, while the euro fetched $1.3257 and 129.96 yen compared with $1.3264 and 130.02 yen.

The dollar was likely to trade in a tight range ahead of closely watched US events, including second-quarter growth data, the Fed policy decision and jobs figures on Friday, said a senior dealer at a major European bank in Tokyo.

The Fed policy committee's post-meeting statement will be parsed for clues on when, and how quickly, it plans to taper its $85 billion-a-month asset-purchase programme. A pull-back on the drive would mean fewer dollars sloshing around in the financial system, driving up demand and the currency's value.

Even if US data is not great, "I doubt the FOMC will change the language", which is likely to push the dollar higher, the dealer told Dow Jones Newswires.

Fed chairman Ben Bernanke has suggested the bank could begin cutting back on its quantitative easing programme later this year and possibly end it by the middle of next year if the world's economy continues to improve.

However, when global markets went into a downward spiral he later sought to assure investors that near-zero interest rates would stay in place for some time, given the economy's slow recovery.

The Fed has said any rate hikes still hinged on reducing the unemployment rate to 6.5 percent and keeping inflation at around 2.0 percent.

The dollar was largely firmer against other Asia-Pacific currencies.

It rose to Sg$1.2732 from Sg$1.2684 on Tuesday, to 43.55 Philippine pesos from 43.41 pesos, to Tw$30.00 from Tw$29.95, to 61.09 Indian rupees from 59.61 rupees and to 31.36 Thai baht from 31.26 baht.

It was also up at 1,122.24 South Korean won from 1,109.35 won but slipped to 10,280 Indonesian rupiah from to 10,293 rupiah.

The Australian dollar eased to 90.23 US cents from 90.78 cents while the Chinese yuan changed hands at 15.95 yen against 16.01 yen.

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http://www.globalpost.com/dispatch/news/afp/130731/dollar-holds-firm-ahead-fed-meeting-outcome-0