Dollar steadier after drubbing; Aussie eases

By Ian Chua

SYDNEY (BestGrowthStock) – The U.S. dollar steadied above a 15-year low versus the yen in early Asia on Tuesday, while the euro came under some pressure after failing to hold above $1.4000 again.

With the U.S. Federal Reserve set to pump more money as early as next week to spur a flagging economy but still no clear consensus on how much cash they will inject, analysts expect the dollar to stay choppy.

Keeping the market guessing, New York Fed President William Dudley said whether an incremental or big bang approach to asset purchases by the Fed would work better depends on the economic context.

Dudley also said he would put very little weight on what the market is pricing in.

The dollar was last at 80.82 yen versus 80.77 late in New York, after having fallen as low as 80.41 on trading platform EBS, a 15-year low and not far off a 79.75 record low.

Last month, Japan intervened to slow the yen’s gains to little avail, and traders said chances of more official yen selling would increase if the dollar falls below 80 yen.

“The market may be looking to square up ahead of next week’s FOMC. There is a sense that a big QE is coming and perhaps the market is wondering whether it may have overcooked its expectations a little bit on that front,” said Greg Gibbs, strategist at RBS in Sydney.

On Monday, the market saw a short-term truce among the G20 economies on competitive currency devaluation as a green light for more dollar weakness.

Even upbeat U.S. economic data such as a 10 percent rise in existing home sales failed to support the greenback on Monday.

The euro bought $1.3919 after once again failing to hold at levels above $1.4000, keeping intact a familiar range roughly between $1.3700 and $1.4150 seen this month.

“It’s tried a few times and failed. People are quick to lock in profit these days,” said Grant Turley, strategist at ANZ in Sydney.

Against the yen, the euro fetched 112.51 yen, down from 112.82 yen late in New York and testing short-term support at around 112.52, Monday’s low. It was slipping toward the lower end of this month’s range between 111.54 and 115.66.

Also on the backfoot, the Australian dollar eased to $0.9885, from $0.9904 in New York, a day after coming close to testing parity.

The Aussie, however, was still seen supported by demand stemming from corporate merger activities and heightened expectations of a near-term interest rate hike.

Consumer inflation data due on Wednesday will be closely watched to see if the Reserve Bank of Australia will indeed tighten monetary policy.

Markets are pricing in a 52 percent chance of a 25 basis point rate hike to the 4.5 percent benchmark rate at the November 2 meeting.

(Additional reporting by Steven C. Johnson in NEW YORK)

Dollar steadier after drubbing; Aussie eases