· Dollar stands tall as Fed heads toward taper
The dollar held within striking distance of the year’s peaks on the euro and yen on Wednesday, as investors looked for the Federal Reserve to begin unwinding pandemic-era policy support faster than central banks in Europe and Japan.
Moves were slight in Asia ahead of the Fed’s meeting later in the day and the dollar bought 113.84 yen, against a 2021 peak of 114.69, and traded at $1.1582 per euro against the year’s top of $1.1522 per euro. The U.S. dollar index held overnight gains to sit at 94.074.
The Fed is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT.
But traders are focused on clues around what that means for timing of rate rises, after a month of seismic bond market moves in anticipation of hikes as soon as next year.
Currency markets’ next moves likely depend on traders’ perceptions of the relative pace of policy tightening and on whether markets can stick with an assumption that the Fed funds rate won’t get much higher than 1.75% through the cycle.
Sterling sat just above a two-week low at $1.3628 in Asia, roughly in the bottom half of range it has traded since July.
Reference: CNBC
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