Investors’ expectations are high and great that the U.S. Federal Reserve will later today announce a modest reduction to their quantitative easing program and as a result the U.S. Dollar Index once again remained within striking distance of the recently struck 4-week low. The U.S. Dollar Index was trading higher at 81.181 .DXY, a small gain of 0.1%, but still close to Monday’s multi-week trough of 80.968 .DXY.
Following the release of the policy meeting outcome, Fed Chairman Ben Bernanke will hold a press conference and sentiment suggests that the Fed’s tone and outlook is likely to remain decidedly dovish especially given the lackluster labor data and the Fed’s promise to hold interest rates at their current ultra low until unemployment drops below 6.5% with some analysts speculating that the Fed might now push that threshold even lower.
Euro Gets a Lift from ZEW Survey
As reported at 1:03 p.m. (JST) in Tokyo, the USD/JPY pair edged up higher to 99.24 Yen, a gain of 0.1%, while the EUR/USD pair traded at $1.3354, not far from Monday’s high of $1.3385. The Euro is getting some support from the release late yesterday of Germany’s ZEW sentiment surveys which showed unexpected optimism in both the current situation and outlook.