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Dollar steadies ahead of Fed policy meeting outcome, yen gains on data
The dollar steadied against its major counterparts on Wednesday’s European trading session as investors held their breath awaiting the outcome of the Federal Reserve`s policy meeting for signs on the U.S. stimulus outlook.
The outcomes of Federal Open Market Committee`s policy meeting will be closely watched, as investors look for clues on whether the FOMC members think that current economic conditions are good enough to stop the ongoing easing or not.
The Fed’s policy decision is due at 18:00 GMT, while Fed’s Chairman Ben Bernanke is expected to hold a press conference shortly afterwards.
The dollar has been weaker recently on uncertainty over whether the Fed will decide to scale back the pace of its bond purchases, currently set at $85 billion a month, though the bond buying program has generally weighed on the dollar.
The USDIX is currently trading around 80.81 after opening at 80.86, having so far hit a high of 80.89 and a low of 80.68.
The British pound slipped to $1.5610 from an opening of $1.5639, while recording its lowest at $1.5603 and it’s highest at $1.5668, ahead of the Fed’s announcement while the release of the Bank of England’s policy meeting minutes also weighed on sterling pound as its shows continued split among MPC members on the outlook of monetary stimulus for the fifth consecutive month.
In its two-day meeting held June 5-6, the Monetary Policy Committee (MPC) voted unanimously to maintain the benchmark interest at its record low of 0.50 percent and the target of Asset Purchasing Facility (APF) at 375 billion pounds accordingly.
However, three out of the nine-member committee continue to believe the size of asset purchases program should be boosted by an extra 25 billion pounds to 400 billion pounds. Governor Mervyn king and Paul Fisher joined David Miles, preferred to increase the size of quantitative easing by another 25 billion pounds to a total of 400 billion pounds.
As for the Japanese yen, it strengthened for the first time in three days against the dollar ahead of the Federal Reserve meeting that may clarify the outlook for U.S. monetary stimulus. Meanwhile, A report showed exports surged in May by the most since 2010 boosting Prime Minister Shinzo Abe’s campaign to revive the world’s third-largest economy.
The USDJPY is currently trading lower around 95.03, retreating from an opening of 95.30. the pair has so far recorded a low of 94.82, while the session’s high was hit at 95.65.
Asian stocks mixed ahead of Fed announcement, Nikkei rallies on exports
Asian stocks were mixed on Wednesday ahead of Fed Chairman Ben Bernanke’s speech later in the day. The U.S. Federal Reserve two-day meeting ends today and investors are looking for clues on the outlook for stimulus.
- MSCI Asia Pacific Index advanced 1% to 133.06 as of 15:40 in Tokyo
Nikkei rallied today after a report showed the nation’s shipments surged in May by most since 2010, beating analysts’ estimates. The weaker yen managed to boost the value of overseas income at carmakers and electronics manufacturers.
- Nikkei 225 closed 1.83% higher at 13245.22
- Topix closed 1.86% higher at 1106.57
In Australia stocks rose after a report showed the leading index rose 0.3% in April and amid hopes the U.S. Federal Reserve will maintain its pace of bond buying. The weaker Australian dollar also helped stocks rise today.
- S&P/ASX 200 closed 0.98% higher at 4861.38
- New Zealand’s NZX 50 closed 0.37% lower at 4445.55
In China and Hong Kong stocks fell amid signs of cash shortage dragging the financial stocks lower, while a report showed that the government may soon expand property tax trials to more cities.
- China’s CSI 300 index closed 0.74% lower at 2400.76
- Hong Kong’s Hang Seng closed 1.13% lower at 20986.89
- Kospi closed 0.65% lower at 1888.31
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