The dollar held near the lowest in three weeks against the euro before the Federal Reserve concludes a two-day meeting today when policy makers will decide whether to slow its $85 billion of monthly asset purchases.
The Federal Open Market Committee will reduce Treasury purchases to $40 billion, while continuing to buy $40 billion of mortgage backed securities, according to the median estimates of economists surveyed by Bloomberg News. The Bloomberg U.S. Dollar Index remained near a five-week low. The pound held a two-day loss against the euro before the Bank of England releases minutes of its last meeting. The yen weakened against most major peers as stock gains curbed demand for haven assets.
“The absolute amount of tapering will be the key,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “I anticipate that we’ll see the dollar strengthen in the event that we get at least $10 billion worth of tapering. If we were to get less than $10 billion, that would certainly throw some doubt over whether the Fed is seriously going to persist with tapering and end their purchases, and we’ll see the dollar weaken on that.”
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