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Dollar rally stumbles ahead of Fed meeting

Dollar rally stumbles ahead of Fed meetingTOKYO: The dollar’s rally against the yen stumbled Wednesday before a Federal Reserve meeting next week which could give clues about the timing of a US interest rate rise.

In Tokyo trading the dollar slipped to 123.65 yen in the afternoon from 123.86 yen in New York, but it was up from 124.43 yen in Tokyo earlier Tuesday.

The 19-nation euro edged down to $ 1.0939 from $ 1.0942 and to 135.22 yen from 135.53 yen, as Greek lawmakers get set to vote on a second batch of reforms that must pass if Athens is to receive its third international bailout.

The euro is still well up from $ 1.0825 and 134.61 yen Tuesday in Asia.

“The euro is higher as progress continues to be made toward a third financial assistance programme for Greece,” said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities.

The Federal Reserve holds its next policy meeting from Tuesday, with traders looking for clues about its timetable for raising interest rates.

Analysts have forecast an increase in either September or December after Fed chief Janet Yellen said she saw a move by the end of the year.

But “one needs to be cautious when buying dollars in anticipation of a rate hike that September is not yet a done deal”, Masato Yanagiya, head of foreign exchange at Sumitomo Mitsui Banking Corp., told Bloomberg News.

“There is no detail about the size or pace of rate hikes. Dollar-buying will strengthen more towards September.”

The dollar was mostly weaker against a basket of Asia-Pacific currencies.

It slipped to 1,153.05 South Korean won from 1,158.63 won on Tuesday, to 63.56 Indian rupees from 63.74 rupees, and to 13,370 Indonesian rupiah from 13,409 rupiah.

The greenback also edged down to 45.24 Philippine pesos from 45.31 pesos, to Sg$ 1.3642 from Sg$ 1.3699, and to Tw$ 31.19 from Tw$ 31.24, while it ticked up to 34.60 Thai baht from 34.48 baht.

The Australian dollar bought 74.14 US cents, up from 73.50 cents, while the Chinese yuan fell to 19.89 yen from 20.04 yen.

Copyright AFP (Agence France-Presse), 2015

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