News Column

Dollar stays at upper 101 yen in morning ahead of Fed policy decision

July 28, 2014



The U.S. dollar stayed in the upper 101 yen range Tuesday morning in Tokyo as traders refrained from making major moves ahead of the outcome of the U.S. Federal Reserve's policy meeting through Wednesday.

At noon, the dollar fetched 101.88-89 yen compared with 101.81-91 yen in New York and 101.87-88 yen in Tokyo at 5 p.m. Monday.

The euro was quoted at $1.3434-3435 and 136.87-90 yen against $1.3435-3445 and 136.86-96 yen in New York and $1.3431-3432 and 136.83-87 yen in Tokyo late Monday afternoon.

The dollar was nearly at a standstill before the U.S. central bank's Federal Open Market Committee votes on policy. The Fed will likely cut its current $35 billion asset purchases by $10 billion, on track to end quantitative monetary easing by October.

Market players are hungry for hints on the timing of the Fed's first interest rate hike from its current near-zero level. Chair Janet Yellen has said a hike will come "a considerable time" after the stimulus ends but may come sooner if employment and inflation in the United States pick up.

"The FOMC probably isn't looking to feed market expectations just yet," said Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp. It may make a slight improvement in its assessment of labor market conditions while attempting to keep the market's reaction to a minimum, he said.

Data on U.S. gross domestic product in the April to June period are also due out Wednesday, carrying expectations of improvement after a surprise 2.9 percent contraction in the previous quarter.

"People are expecting either a strong reading in the order of more than 3.3 percent growth, or an upward revision of the previous data. If it doesn't deliver, the dollar will be sold for the yen," Moritani said.

The euro was boxed in a narrow range against the dollar and the yen before the release of inflation data on Thursday.



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Source: Japan Economic Newswire


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