The U.S. Dollar Index, used by investors to gauge the relative value of the greenback to its major peers, remained within striking distance of a 6-month high as investors await the Federal Reserve’s policy review which is due out on Wednesday. Economists and analysts polled expect that the Fed will once again taper its monthly bond purchasing program by $10 billion in order to end quantitative easing by year’s end. What is of the utmost importance is what clues the Fed’s FOMC will provide investors with the likely timing of an interest rate increase. Also due out this week will be the second quarter GDP figures and, on Friday, the non-farms payroll report, either or both of which could alter the Fed’s future direction.
As reported at 11:33 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 81.006 .DXY, within a very tight trading band which ranged only 76 pips as compared to last Friday’s 283 pip range. Trading recently at $1.3438, the EUR/USD remained close to the session high of $1.3440 and low of $1.3427, which was itself only a few pips from Friday’s low of $1.3421. The USD/JPY, meanwhile, steadied at 101.85 Yen.
Market Players Look for Evidence
Recent U.S. data, which included key housing figures, disappointed investors and failed to sway bearish sentiment. Analysts say that investors will be sitting on the sidelines for the time being and waiting for some further confirmation of an improving U.S. economy. What may drive sentiment, at least for the EUR/USD, is upcoming inflation and PMI data for the E.U.