| TOKYO, March 19
TOKYO, March 19 The dollar stood near its lowest
level in more than four months against a basket of currencies on
Wednesday, on some trepidation ahead of Janet Yellen's inaugural
policy review as the Federal Reserve's chief.
Global markets breathed a sigh of relief after Russian
President Vladimir Putin said he did not plan to seize other
regions of Ukraine, a day after Crimean citizens voted to be
annexed by Moscow.
The dollar index stood at 79.382, within a
whisker from a 4-1/2-month low of 79.268 touched last Thursday.
In the past two years, there has been strong support for the
index around 78.60-79.00.
The Fed is widely expected to continue to reduce the size of
its monthly bond purchase program by $10 billion at the end of
its two-day policy meeting later in the day, the first policy
review since Yellen took the helm at the world's most powerful
Traders are keenly focused on the Fed's forward guidance on
policy, with many expecting the Fed to reassure markets that
interest rate hikes are still a long way off despite the
unemployment rate easing faster than expected.
The Fed previously said that it would not raise interest
rates until joblessness fell to at least 6.5 percent, a pledge
that policymakers thought would hold until at least mid-2015.
But that rate hit a five-year low of 6.6 percent in January,
before rising to 6.7 percent in February.
Expectations that Yellen will pursue a broadly dovish stance
have helped to rein in U.S. Treasury yields, which in turn
undermined the attraction of the dollar for bond investors.
"Many investors had probably expected the dollar to
strengthen this year because the U.S. economy looked in better
shape than others," said Katsunori Kitakura, associate general
manager of market making at Sumitomo Mitsui Trust Bank.
"But their positioning has probably been damaged by the
Ukraine crisis and poor economic data due to bad weather, and
that's probably a reason for the dollar's struggles recently,"
The softness in the dollar index also reflected a resurgence
in the euro, which fetched $1.3930, not far from $1.3967
hit on Thursday, its highest level in 2 1/2 years.
Although the single currency was pitched by many banks at
the start of 2014 as one of this year's likely losers, it has
drawn strength from a recovery in the euro zone, the currency
bloc's strong current account balance and an absence of fresh
easing steps from the European Central Bank.
The euro also stood at 83.97 pence, having hit a
three-month high of 84 pence sharp.
The single currency has also quickly pared its losses
triggered on Tuesday by a sharp drop in Germany's ZEW survey of
investor and analyst sentiment, which was due largely to the
The Australian dollar stood near a three-month high of
$0.9136 hit on Tuesday, supported by a return of risk appetite.
It last sit at $0.9132.
The New Zealand dollar stood near 11-month high, thanks to
the Reserve Bank of New Zealand's rate hike last week and the
prospects of further tightening. It was last at $0.8619
, after having risen to $0.8641 on Tuesday.
The yen held onto much of its recent gains with the dollar
trading at 101.40 yen, near one-month low of 101.20 yen
hit on March 3.
The yen showed little reaction to Japan's
larger-than-expected trade deficit.
(Editing by Shri Navaratnam)