The dollar was 0.8 percent from a five-year high versus the yen as the Federal Reserve begins a two-day meeting today and ahead of data forecast to show inflation picked up November.
Volatility in Group of Seven currencies declined from a two-month high as traders weighed whether economic indicators are strong enough for an immediate trimming of stimulus by the Fed. The median forecast for where the dollar will trade by March rose to 103.5 yen yesterday, according to data compiled by Bloomberg. Australia’s currency was near its lowest since 2008 versus New Zealand’s before the larger economy’s central bank releases minutes of its latest policy meeting.
“It is more likely that the Fed will decide to taper this week than markets think,” said Noriaki Murao, the New York-based managing director of the marketing group for financial markets at the Bank of Tokyo-Mitsubishi UFJ Ltd. “The initial reaction to a taper will probably be dollar buying. Dollar-yen may climb above its recent high after a taper announcement.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.