FOREX-Dollar under pressure as Fed takes centrestage

* Dollar still pressured after sharp fall overnight

* Fed policy outcome due at around at 1815 GMT

* Markets uncertain about size of expected stimulus

* Asian trading seen subdued with Japan shut for a holiday

By Ian Chua

SYDNEY, Nov 3 (BestGrowthStock) – The U.S. dollar stayed on the
backfoot early in Asia on Wednesday, with the euro holding
above $1.4000 and the Aussie just off parity as the Federal
Reserve looked set to provide more stimulus to spur a flagging

Due at around 1815 GMT, the Fed is expected to announce
plans to buy hundreds of billions of dollars in U.S. government
debt in order to foster a stronger economic recovery.

Markets are generally priced for the Fed to initially
commit to buying at least $500 billion in Treasuries over five
months, although much uncertainty surrounds the scope and pace
of bond purchases.

A bigger-than-expected stimulus could further weigh on the
dollar, while a smaller programme could help the embattled
greenback stage a rebound.


Multimedia report on run-up to the Fed meeting:

Top News-U.S. elections:

“I think they’ll take the approach that central banks
usually take for interest rates, which is to make a small
change now and reconsider at the next meeting,” said Joseph
Capurso, currency strategist at Commonwealth Bank in Sydney.

“The market is going to be surprised and the U.S. dollar is
going to have a strong across-the-board rally. The market has a
lot priced in now and that’s keeping the dollar weak.”

Trading in Asia is expected to be subdued with Japanese
markets shut for a holiday and in the lead up to the Fed’s

“Investors and clients have pretty much got the positions
that they need, and as a result, they’re not going to do a lot
until the Fed outcome,” said Philip Burke, a chief currency
trader at JPMorgan.

Markets were also keeping an eye on the results of U.S.
mid-term elections on Tuesday. Some analysts said a Republican
victory could be positive for the U.S. currency on market hopes
for increased fiscal austerity and less government regulation.

Having breached resistance around the $1.4000 area
overnight, the euro last traded at $1.4031 (EUR=: ) versus
$1.4038 late in New York, with immediate resistance seen at the
overnight high of $1.4058.

Against the Japanese currency, the euro bought 113.14 yen
(EURJPY=: ) compared with 113.29 in New York, while the dollar
fetched 80.61 (JPY=: ), little changed from 80.68 yen.

The Australian dollar was at $0.9988 (AUD=D4: ), having hit a
28-year high of $1.0025 after a surprise interest rate hike by
the Reserve Bank of Australia on Tuesday.

The RBA lifted the cash rate by 25 basis points to 4.75
percent and left the door open for more, delivering a
pre-emptive strike against inflation.

“Our view is that there will probably be two more rate
hikes in this tightening phase, dependent to some degree on
what the banks pass through,” said Stephen Roberts, chief
economist at Nomura. (([email protected];
+61-2-9373-1871; Reuters Messaging:
[email protected]))

FOREX-Dollar under pressure as Fed takes centrestage