Wednesday August 21, 2013 - 00:54:10 GMT
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Reuters - www.reuters.com
FOREX NEWS - Dollar licks wounds as Fed minutes awaited
* Dollar pulls away from one-week low vs yen, 6-month lows vs EUR, CHF
* New Zealand dollar remains under pressure after plunge
By Lisa Twaronite
TOKYO, Aug 21 (Reuters) - - The dollar took back some lost ground against the yen though remained near a half-year low against the euro in early Asian trade on Wednesday, as investors awaited minutes of the U.S. Federal Reserve's latest meeting for clues on its policy outlook.
Speculation that the U.S. central bank is poised to begin tapering its $85 billion a month in asset purchases as early as September is generally positive for the dollar, as it tends to lift U.S. Treasury yields. But it can also pressure equities and increase the appeal of perceived safe-haven currencies, such as the yen and Swiss franc.
The dollar rose 0.1 percent to 97.35 yen, pulling away from a one-week low of 96.88 yen hit on Tuesday. The dollar was flat from the previous session against the Swiss franc , changing hands at 0.9172 francs, after tumbling to 0.9145 francs on Tuesday, its lowest since June 13.
Against a basket of major currencies, the dollar was slightly higher, at 80.941.
The euro was nearly flat against the dollar at $1.3419 , after rising to a six-month high of $1.3452 on Tuesday as the yield premium that 10-year U.S. Treasury notes offer over German Bunds narrowed.
Yields on the U.S. benchmark 10-year Treasury note were steady around 2.81 percent after pulling away from a two-year high of 2.90 percent hit on Monday as investors priced in expectations that the Federal Open Market Committee meeting minutes will signal its intention to taper the stimulus.
"We expect the minutes of the July FOMC meeting to show that committee members viewed the improvement in labour markets and reduced downside risk as sufficient to signal that many on the committee stand ready to reduce the pace of purchases in September, should current trends continue," strategists at Barclays wrote in a note to clients on Wednesday.
"Overall, we expect the minutes to maintain the bifurcated message of recent Fed communications: sounding hawkish on tapering and dovish on rate hikes," they said.
Bank of Japan Governor Haruhiko Kuroda also nicked yen sentiment a bit, telling Japan's Mainichi newspaper in an interview published on Wednesday that he won't hesitate to provide further monetary stimulus if downside risks from a planned sales tax hike or overseas economies increase.
The New Zealand dollar, meanwhile, remained under pressure, edging down to US$0.7959 after plunging more than 1 percent in the previous session after the Reserve Bank of New Zealand announced home lending restrictions and said the kiwi dollar was overvalued.
The Australian dollar fell 0.1 percent to US$0.9063 .
© Thomson Reuters 2011. All rights reserved.
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