USD Higher Ahead of FOMC Meeting Next Week

The dollar advanced for a third day against the yen on speculation improvement in the U.S. economy will encourage the Federal Reserve to dial back stimulus when policy makers meet next week.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose for an eighth time, the longest rally since May 2012 before data forecast to show the number of Americans continuing to apply for jobless benefits fell and home sales increased. The 18-nation euro stayed higher against the yen after a two-day gain before a report which may show Germany’s manufacturing industry expanded.

“The focus is on the Fed meeting next week,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles, adding that he expects the central bank to reduce the monthly asset purchases by $10 billion. “Dollar-yen should eventually push up to 106, 107. The trend hasn’t changed.”

The dollar gained 0.3 percent to 104.81 yen as of 9:40 a.m. in Tokyo from yesterday, after rising 0.3 percent in the previous two sessions. It was little changed at $1.3536 per euro, after touching $1.3508 on Jan. 20, the strongest since November 25. The shared currency bought 141.88 yen from 141.60 yesterday, up 0.5 percent since Jan. 20.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu