U.S. Dollar Lower as Fed Seen Keeping Record-Low Rates

The dollar held a two-day decline versus the euro on bets U.S. policy makers meeting this week will say they intend to keep interest rates at a record low for an extended period even as they end bond buying.

A gauge of the U.S. currency headed for its first monthly loss since June as traders cut the probability the central bank will raise borrowing costs by October 2015 to a 49 percent chance from 85 percent odds at the end of last month. The Fed starts a two-day meeting today. The yen fell against all except two of its 16 major peers before the Bank of Japan sets policy this week with some economists predicting an expansion of monetary stimulus.

“The key is going to be the tone of the Fed’s statement, and I think the tone will be extremely cautious,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “In the near term, the dollar is going to be heavy.”

Bloomberg

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