By Hiroyuki Kachi
The dollar was a tad higher against the yen and the euro in Asia
trade Wednesday, with investors largely taking a wait-and-see
stance ahead of a closely watched Federal Reserve policy meeting
outcome.
The dollar (USDJPY) was at Yen107.24 compared with Yen107.13
late Tuesday in New York, close to a six-year high of Yen107.39 on
Friday.
Meanwhile, the euro (EURUSD) was at $1.2952 from $1.2960 and at
(EURJPY) Yen138.90 from Yen138.86.
Investors are now awaiting the outcome of the Federal Open
Market Committee policy later in the day, with many of them
expecting to get firmer signals on when a U.S. rate increase might
take place.
The dollar already showed itself resilient enough to erase
earlier losses caused by a Wall Street Journal report on the Fed's
likely view. The report suggested the Fed would maintain an
important phrase that rates will remain low for a "considerable
time" after its bond-buying program is over. That triggered a
short-lived bout of dollar selling.
"The underlying trend (of dollar strength) hasn't changed," said
Kosuke Hanao, head of FX at HSBC in Tokyo, adding that a U.S. rate
increase is just a matter of time and that ultimately there is no
change to the basic scenario.
"The mood in the market is get ready for dip buying" of the
dollar, said Kengo Suzuki, chief FX strategist at Mizuho
Securities, noting that investors such as Japanese importers, who
missed the chance to buy the dollar before the recent rally, are
placing bids around Yen106.90 in case the greenback falls.
"It is difficult to gauge how far (the FOMC outcome) has been
factored in," at this point given the considerable amount of dollar
buying in recent sessions, said Mr. Suzuki.
But even if there is a selloff after the FOMC announcement, the
greenback's downside will likely be well supported around
Yen106.50, due to the continuing divergence in the monetary policy
stance of the U.S. and its peers including Japan, Mr. Suzuki said.
He added that he expects the dollar will likely challenge Yen108 in
the short term.
The WSJ Dollar Index , a measure of the dollar against a basket
of major currencies, was up 0.07% at 76.20.
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