The dollar remained lower against the yen and euro amid speculation that the Federal Reserve will expand monetary stimulus at a two-day meeting starting today.
Demand for the relative safety of the world’s reserve currency was also limited as investors weighed prospects for a U.S. budget deal. The 17-nation euro traded near a two-week low versus the yen before a German survey of investor confidence today forecast to show a negative index figure for a seventh- consecutive month. European Union heads of government will hold a summit on Dec. 13-14 in Brussels.
“It’s almost certain the Fed will announce that they are going to start buying Treasuries outright once Operation Twist ends,” Ray Attrill, Sydney-based global co-head of currency strategy at National Australia Bank Ltd., said in reference to the central bank program of of swapping $45 billion a month in short-term Treasuries for long-term debt. “I suspect there will be a dollar-negative knee-jerk reaction.”