FOREX-Dollar rises versus euro; Fed minutes loom

* Euro retreats to one-week low versus U.S. dollar

* Investors await FOMC minutes for insight into easing

* Dollar hovers around 82 yen, near 15-year lows
(Adds quote, detail, changes byline, changes dateline, previous

By Wanfeng Zhou

NEW YORK, Oct 12 (BestGrowthStock) – The U.S. dollar edged higher
against the euro on Tuesday on a short-covering bounce as
investors awaited minutes from the Federal Reserve’s latest
meeting for clues on the central bank’s stance toward
purchasing more assets to stimulate the economy.

The dollar has sold off sharply in recent weeks, pushing
the euro as high as $1.4030, as expectations heightened that
the Federal Reserve would pump more cheap money in the economy
as early as next month.

But dollar selling has eased since late last week after the
euro failed to hold above the $1.40 area, prompting investors
to get out of some of their massive short positions in the

“We had a very dramatic move, with session after session of
euro hitting new highs,” said Camilla Sutton, senior currency
strategist at Scotia Capital in Toronto. “We will be in for a
small period of rest here before it has a catalyst to push it
higher still.”

Investors also covered stretched short positions in the
dollar as they scaled back some of their more aggressive QE
expectations. Fed minutes are scheduled to be released at 2
p.m.. (1800 GMT)

A Reuters poll of U.S. primary dealers conducted last week
forecast a new round of quantitative easing would range between
$500 billion and $1.5 trillion [FED/R], with market players
also keen to assess whether the Fed will adopt a “drip-feed” or
“shock-and-awe” approach.

“I think it has the opportunity to disappoint people. It’s
going to focus on incremental changes in policy,” said Mark
McCormick, currency strategist at Brown Brothers Harriman in
New York.

“A lot of people are starting to get a little bit
concerned. We saw that consolidation starting to take place on
Friday and it seems to have rolled over into today as well,” he

The euro (EUR=: ) fell as low as $1.3775 on trading platform
EBS, its lowest level since Oct. 5 and a further pull-back from
a more than eight-month high of $1.4030 hit last week.

The euro last traded down 0.3 percent at $1.3827, with
traders highlighting a large option expiry at $1.3800 which
could serve to contain the euro into the 1400 GMT option

The ICE Futures U.S. dollar index (Read more about the global trade. ) (.DXY: ), which tracks the
greenback versus a basket of six currencies, rose 0.3 percent
to 77.651, after hitting a nine-month low of 76.906 last week.

Futures positioning

TWI FX moves since 2007

Interactive map on tensions


The dollar dipped against the yen (JPY=: ), pressured by
falling U.S. Treasury yields.

The dollar fell 0.3 percent to 81.86 yen (JPY=: ), not far
from a 15-year low of 81.37 struck on Monday. Most market
players expect pressure to remain on the dollar/yen pair, with
a test of 80 yen and the record trough of 79.75 yen still in

Analysts said the risk of another round of intervention to
weaken the yen seemed to have increased after Japan weathered
the flurry of weekend G7 and IMF meetings last weekend with
hardly any criticism of its recent yen sales.

Falling stock prices also helped boost risk aversion and
weighed on yen crosses.

The euro fell (Read more about the trembling euro. ) 0.6 percent to 113.23 yen (EURJPY=R: ) and the
Australian dollar was also down 0.4 percent at 80.40 yen

(Additional reporting by Tamawa Desai in London)
(Editing by Theodore d’Afflisio)

FOREX-Dollar rises versus euro; Fed minutes loom