Wary investors gave the U.S. Dollar some minimal support but for the most part exercised caution as the monetary policy decision of the Federal Reserve Bank looms large. The escalation of conflict in Iraq is also a growing concern and could give the greenback some support as a safe haven currency. A recent poll of analysts revealed that expectations are high that the Fed will announce a further QE reduction with monthly bond purchases likely curtailed; however the majority of analysts don’t believe that there will be any change to interest rates at this time. The real focus will be on the speech by Janet Yellen afterward to see if she provides clues as to the timing of an interest rate increase.
As reported at 1:11 p.m. (JST) in Tokyo, the U.S. Dollar Index edged higher to 80.512 .DXY, a gain of 0.1%; the Dollar Index is used by FX traders to assess the dollar’s relative value against a number of major currencies. Meanwhile the EUR/USD was trading at $1.3564, a 0.1% loss for the Euro.
Australian Traders Wary of RBA Easing
In Australia, the Aussie Dollar was a big mover but to the negative side, dipping some 0.4% against the U.S. Dollar as the minutes of the RBA’s latest meeting revealed uncertainty over recent stimulus measures, an indication that there could be additional stimulus in the months to come. The AUD/USD traded at $0.9358, a loss of 0.4%.