REFILE-FOREX-Dollar edges down vs yen as Fed, Bernanke awaited

Wed Jun 19, 2013 12:30am EDT

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* Market seeks clarity on Fed's next policy step
    * Aussie in the crosshairs against US dollar, euro

    By Lisa Twaronite and Wayne Cole
    TOKYO/SYDNEY, June 19 (Reuters) - The dollar drifted lower
against the yen in Asia on Wednesday but major currency moves
were small as investors waited the outcome of the Federal
Reserve's policy meeting and hoped for some clear signals on the
future of U.S. monetary policy.
    In what could well be a turning point for global markets, 
Fed Chairman Ben Bernanke has the chance to address speculation
that the central bank will start tapering its asset-buying
stimulus before the year is out.
    The post-meeting Fed's policy statement is due at 1800 GMT
with Bernanke's news conference to follow half an hour later,
and last-minute position adjusting before the outcome of the
Fed's two-day meeting has dominated this week's trade.
    "Positions have been squared off, closed orders have been
filled, it's just settling into positions to move either way,
which ever way is indicated by Mr. Bernanke," said Bart
Wakabayashi, head of forex at State Street Global Markets in
Tokyo.    
    Many analysts suspect Bernanke will try to emphasise that
tapering is not tightening and an actual rise in the funds rate
is still a distant prospect, perhaps not until 2015. But he
could also underscore his remarks last month, when he said the
Fed could opt to slow its bond purchases in the next few
meetings if the economy improves.    
    His news conference is viewed as a test of his ability to
calm the markets and give them some direction, Wakabayashi said.
   
    "I think the market just wants a united message: tapering or
not? The uncertainty there has led to some excess volatility,
which has led to people pulling out of some markets," he added. 
  
    One result has been the sharp rise in longer-dated U.S.
Treasury yields over the past six weeks. Over time this is
expected to act as a support for the U.S. dollar, though in the
near term heavy foreign selling of Treasuries has blunted the
impact.
    Last month, the benchmark yield on 10-year U.S. notes
 jumped 46 basis points, its biggest one-month jump
in nearly 2-1/2 years, according to Reuters data, on growing
anticipation that the Fed will pare its purchases. 
    The dollar was a shade weaker against its Japanese
counterpart, down about 0.1 percent at 95.22 yen, but
steady against the euro at $1.3390 after the single
currency touched a four-month high of $1.3415 on Tuesday.
    Against a basket of currencies, the dollar was a fraction
higher at 80.683, holding above a four-month low of
80.500 touched on Thursday.   
    Some U.S. hedge funds were said to buy one-month dollar
calls overnight and were also buying dollars early in the
session on expectations that Japanese trade data for May would
disappoint. But the report showed exports rose at the fastest
annual rate in more than two years, lifted by a weaker yen and a
moderate pick-up in global demand. 
    
    
    The Australian dollar was in the crosshairs ahead of the
Fed, not only as a commodity currency but also as a liquid proxy
for emerging Asian markets, both of which would come under
pressure on any hint of Fed tapering. 
    Shorting the Aussie against the euro has been particularly
popular, with the single currency climbing 15 percent since
early April.
    The euro was up at A$1.4126 on Wednesday,
approaching a 22-month high of A$1.4237 hit on June 11. Its next
target is the A$1.4340 peak of March 2011.
    Against its U.S. counterpart, the Aussie edged down
0.1 percent to $0.9473.
    The Aussie has shed 10 percent on the dollar since April, a
move welcomed by the Reserve Bank of Australia (RBA) as a
stimulus to the country's export sector.
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