Monday December 16, 2013 - 00:07:29 GMT
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Reuters - www.reuters.com
FOREX NEWS - Yen and Aussie still underdogs, USD pins hopes on Fed
* Subdued start for major currencies after uneventful weekend
* Markets wait to see if Fed will finally taper stimulus this week
* Yen & Aussie dollar both stay under pressure
By Ian Chua
SYDNEY, Dec 16 (Reuters) - The dollar started trade in Asia on Monday pretty much where New York left it as investors waited to see if the Federal Reserve would begin to scale back its massive bond buying stimulus program this week.
The dollar index was little changed at 80.195, having risen late last week on growing expectations the Fed could finally begin to withdraw support at its Dec 17-18 policy meeting.
"It's still 50/50 as to whether the Fed will announce tapering," said Shane Oliver, head of investment strategy at AMP Capital in Sydney.
Oliver said the case for a December taper is that the U.S. labour market looks stronger and fiscal risks have diminished with the budget deal. Against this, inflation remains very low and Fed Chairman Ben Bernanke may prefer to see more evidence that recent employment and spending gains can be sustained.
"I kind of think they should just bite the bullet and start the process to put an end to the "will they taper or not" soap opera," he added.
The euro fetched $1.3736, down from a near two-month peak of $1.3811 scaled last week. Failure to hold above $1.3800 suggested scope for a retreat back to $1.3695 near term, BNP Paribas analysts said.
Against the yen, the dollar bought 103.11, having briefly hit a five-year high just shy of 104.00 on Friday. The euro stood at 141.58 yen, having also scaled a five-year peak of 142.82 on Friday.
Using the low-yielding yen to buy riskier assets has been a very popular trade as investors bet the Bank of Japan will maintain its ultra-loose monetary policy and may even ease further next year when a sales tax hike kicks in.
The BOJ is widely expected to keep its monetary settings unchanged at its Dec 19-20 review, while a survey due later in the morning is expected to show Premier Shinzo Abe's stimulus policies have probably helped lift business confidence in the three months to December.
Investors will also be keeping an eye on HSBC's flash report on China's manufacturing sector due at 0145 GMT.
Any disappointment could add more pressure on the Australian dollar, which has slumped to its lowest in over three months thanks to persistent jawboning from the Reserve Bank of Australia.
The Aussie last stood at $0.8955, having fallen as far as $0.8909 on Friday.
"We remain bearish AUD and forecast AUD/USD to reach 0.80 in three months time," analysts at Barclays Capital wrote in a note to clients.
© Thomson Reuters 2011. All rights reserved
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