Dollar slips against yen ahead of Fed's first meeting of the year
TOKYO : The dollar slipped against the yen and most emerging currencies on Wednesday as markets focus on the Federal Reserve’s first meeting of the year.
The US central bank is not expected to announce any change in monetary policy after the meeting ends later Wednesday, following its historic interest rate raise in December.
But dealers will pore over its post-meeting statement looking for signs that it will back off its signal of four interest rate hikes this year, which would support the dollar.
“If the Fed sounds too dovish a chord, they’ll lose the option to raise rates in March,” Masato Yanagiya, head of foreign-exchange and money trading at Sumitomo Mitsui Banking, told Bloomberg.
“If the Fed isn’t so dovish, it’s likely US yields will rise, and the dollar will strengthen.”
The Bank of Japan wraps up its first policy meeting of the year Friday, after speculation at the start of this week that it is considering more stimulus to counter weakness in the world’s number three economy.
In Tokyo, the greenback weakened to 118.09 yen from 118.42 yen Tuesday in New York. The euro slipped to $1.0864 and 128.30 yen from $1.0868 and 128.70 yen.