Dollar supported ahead of Fed on brighter economic outlook
Mar-13-2012
Date: 13.03.2012
The US dollar hovered just below a seven-week high against a basket of currencies on Tuesday, bolstered by expectations that a string of positive economic data should persuade the US Federal Reserve out of applying fresh stimulus, at least for now.
The yen was buried near a 11-month low against the US currency, with some traders on edge over whether the Bank of Japan may take fresh easing steps at the end of its two-day meeting, after its surprise easing last month. A decision was expected around midday.
The dollar's strength saw the euro hitting one-month low on Monday. The common currency is still smarting from fears that the European debt crisis could worsen again, despite Greece's success in debt-cutting swap deal.
The dollar index stood at 79.74, almost flat from late US levels after having risen as high as 80.132 on Monday, its highest in seven weeks.
"When you look at recent US economic numbers, it will be difficult to argue for an immediate easing," said Koji Fukaya, chief currency strategist in Credit Suisse in Tokyo.
While there could be a bit of profit taking ahead of the Fed's announcement at 1815 GMT, the dollar is seen supported by signs of improvement in the world's biggest economy. Data last Friday showed an encouraging gain of more than 200,000 jobs in February for a third straight month.
The dollar's strength has been most striking against the yen, which has been falling sharply after the BOJ's monetary easing last month.
While the Japanese central bank is expected to refrain from further policy easing on Tuesday, its surprise decision last month to boost asset purchase by 10 trillion yen ($121 billion) and to set inflation goal kept traders cautious.
"I don't think the BOJ will ease today, in which case, there will likely be some profit-taking in the dollar. But the market is nervous after their easing last month," said Teppei Ino, currency strategist at the Bank of Tokyo-Mitsubishi UFJ.
The US currency fetched 82.28 yen, down from Monday's high of 82.54, appearing to consolidate after the run-up to an 11-month high of 82.65 touched on Friday.
Yet many expect further gains in the dollar, with one near-term target seen at 83.11 yen, a 76.4 percent retracement of the dollar's decline from April to record low in October last year.
AFTER GREECE
The euro stood at $1.3181, having recovered a full cent after hitting one-month low of $1.3079 on Monday, helped by technical support at its Ichimoku cloud top at $1.3087 and 55-day moving average around $1.3084.
While the euro has gained a tad in Asian trade on minor stop-loss buying, its outlook remained shaky given that the euro zone economy is slipping into recession, in contrast to a brightening economic picture in the United States.
The yen was buried near a 11-month low against the US currency, with some traders on edge over whether the Bank of Japan may take fresh easing steps at the end of its two-day meeting, after its surprise easing last month. A decision was expected around midday.
The dollar's strength saw the euro hitting one-month low on Monday. The common currency is still smarting from fears that the European debt crisis could worsen again, despite Greece's success in debt-cutting swap deal.
The dollar index stood at 79.74, almost flat from late US levels after having risen as high as 80.132 on Monday, its highest in seven weeks.
"When you look at recent US economic numbers, it will be difficult to argue for an immediate easing," said Koji Fukaya, chief currency strategist in Credit Suisse in Tokyo.
While there could be a bit of profit taking ahead of the Fed's announcement at 1815 GMT, the dollar is seen supported by signs of improvement in the world's biggest economy. Data last Friday showed an encouraging gain of more than 200,000 jobs in February for a third straight month.
The dollar's strength has been most striking against the yen, which has been falling sharply after the BOJ's monetary easing last month.
While the Japanese central bank is expected to refrain from further policy easing on Tuesday, its surprise decision last month to boost asset purchase by 10 trillion yen ($121 billion) and to set inflation goal kept traders cautious.
"I don't think the BOJ will ease today, in which case, there will likely be some profit-taking in the dollar. But the market is nervous after their easing last month," said Teppei Ino, currency strategist at the Bank of Tokyo-Mitsubishi UFJ.
The US currency fetched 82.28 yen, down from Monday's high of 82.54, appearing to consolidate after the run-up to an 11-month high of 82.65 touched on Friday.
Yet many expect further gains in the dollar, with one near-term target seen at 83.11 yen, a 76.4 percent retracement of the dollar's decline from April to record low in October last year.
AFTER GREECE
The euro stood at $1.3181, having recovered a full cent after hitting one-month low of $1.3079 on Monday, helped by technical support at its Ichimoku cloud top at $1.3087 and 55-day moving average around $1.3084.
While the euro has gained a tad in Asian trade on minor stop-loss buying, its outlook remained shaky given that the euro zone economy is slipping into recession, in contrast to a brightening economic picture in the United States.
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