* USD shade firmer on yen, but near four-month lows on euro
* Euro and Swissy in demand vs emerging market currencies
* Tensions running high before Fed statement, Bernanke
* Investors aching for clarity over Fed's next step, might
not get it
By Wayne Cole
SYDNEY, June 18 All the major currencies marked
time in Asia on Wednesday as investors waited anxiously to see
if the Federal Reserve could clarify the outlook for policy
without sending markets into a fresh frenzy
Last-minute position adjusting before the outcome of the
Fed's two-day meeting had seen the U.S. dollar nudge up on the
yen but lose ground to both the euro and Swiss franc.
Especially jittery were emerging market currencies, from
Asia to South Africa to Brazil, as they have the most to lose
should the Fed even hint at a slowdown in stimulus.
The dollar was a shade firmer at 95.55 yen thanks to
Japanese demand, but under pressure against the euro at $1.3393
after the single currency touched a four-month high.
Against a basket of currencies, the dollar was a fraction
higher at 80.705 but still uncomfortably close to recent
four-month lows of 80.500.
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
before the year is out.
Unfortunately nobody is sure what position he will take, or
how markets will choose to interpret his stance. The Fed's
policy statement is due at 1800 GMT with Bernanke's news
conference half an hour later.
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.
However, investors have a habit of pricing in everything,
right away and seem to have concluded that an end to super-cheap
money is inevitable and are positioning for that.
"Markets will likely continue to view any move to withdraw
policy as the first step of many and, as a result, volatility is
likely to remain elevated as the market balances incoming data
with Fed communications about its policy stance," said Barclays
analyst Michael Gapen in a note.
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
Indeed, it could be one reason the U.S. dollar has declined
against both the euro and the Swiss franc in the past few weeks.
Another trend in the making is a rotation out of commodities
and emerging markets and toward developed nation assets.
Investing in emerging markets has been an extremely crowded
trade in recent years so the pullback in positions has resulted
in steep falls in emerging market bonds, shares and currencies.
Outside of the yen and the yuan, most currencies in Asia
have been under heavy pressure, even forcing Indonesia to hike
interest rates in a shock move last week.
Also in the crosshairs is the Australian dollar, not only as
a commodity currency but also as a liquid proxy for emerging
Asian markets. 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$1.4109 on Wednesday, having
gained 0.8 percent overnight to near a 22-month high of A$1.4237
hit last week. Next stop is the A$1.4340 peak from March 2011.
Against its U.S. counterpart, the Aussie was
hovering at $0.9465 having been as low as $0.9440 offshore.
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.