USD Weaker Ahead of FOMC

The dollar weakened against the euro and a host of resource-linked currencies Wednesday as investors waited to scrutinize an updated policy statement from the Federal Reserve.

The overall market mood was “tentative” as oil prices consolidated above $30 a barrel while moves in both global equities and Treasurys were muted, market strategists from Scotiabank noted.

One dollar  bought ¥118.42, compared with ¥118.43 late Tuesday in New York. The euro  was at $1.0897, up from $1.0864 Tuesday.

The ICE U.S. Dollar index , a measure of the dollar’s strength against a basket of six currencies, was down 0.6% at 98.7860.

The relaxed trading environment has helped investors regain their appetite for risk, which is draining support from the dollar, analysts said.

Meanwhile, investors were hesitant to buy yen ahead of the Bank of Japan meeting later this week, said Josh O’Byrne, a G-10 currency strategist at Citigroup.

“Cross-yen investors are feeling better about risk. People are aware of BOJ this week so they’re less inclined to be buyers of yen,” O’Byrne said.

The Canadian  and Australian dollars , as well as the Mexican peso , were all outperforming the dollar as hope for an oil rebound rises.

via MarketWatch

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza