The U.S. Dollar edged lower against the Japanese Yen, following the trend in Japan’s equity markets which have fallen about 0.6%, however investors expect that several market-shaping events, including this week’s Federal Reserve policy decision, could limit any potential gains that the greenback might be able to make. Analysts say that the growing conflict in Iraq has been keeping investors jittery, sending equities lower and pushing oil higher as risk aversion becomes the norm, however safe haven appeal is also still limited.
As reported at 11:44 a.m. (JST) in Tokyo, the USD/JPY pair was trading at 101.84 Yen, dipping about 0.2% and heading toward the bottom of this month’s recent range, 102.80 to 101.60 Yen. The EUR/USD was trading at $1.3537, close to this month’s 4-month low at $1.3503; the Euro has been under pressure since the ECB announced a slew of measures aimed at encouraging growth.
Fed Watchers Wait
Though relatively unchanged in today’s trading, the U.S. Dollar Index has gained about 0.3% over the past week and analysts concur that the increase in yields in U.S. Treasury instruments and the Iraqi conflict have helped to boost the greenback’s attraction as a safe-haven currency. Fed watchers have expectations that the Fed could take a more hawkish stance and hint at interest rate increases in the middle of next year; markets will be anxiously awaiting the Fed Chairman’s speech for additional clues as to possible direction and interest rate timing.