FOREX-Euro down vs dollar but pares losses on ECB’s Weber

* Euro pares losses dollar on ECB’s Weber comments

* Investors await FOMC minutes for insight into easing

* Dollar hovers around 82 yen, near 15-year lows
(Adds details, updates prices)

NEW YORK, Oct 12 (BestGrowthStock) – The euro pared losses and
traded little changed against the dollar on Tuesday after
European Central Bank Governing Council member Axel Weber said
the ECB’s government bond-buying program has not worked and
should be scrapped.

Speaking in New York, Weber called for the ECB to scale
back its other forms of support as soon as possible and not
delay interest rate hikes. For details, see [ID:nLDE69B266]

The euro recovered sharply in the aftermath of Weber’s
comments as investors compared the euro view with that of the
dollar ahead of the release of minutes from the Federal
Reserve’s September policy meeting.

“The ECB is concerned about the stability of their currency
and they are consequently planning to withdraw the minimal
amount of QE they have supplied,” said Joseph Trevisani, chief
market analyst at FX Solutions in Saddle River, New Jersey.
“The Fed is not concerned and seems to be planning to double
its QE with the result the euro is up. The dollar is down.”

In midday trading, the euro (EUR=: ) was down 0.2 percent at
$1.3848 but well off the session low of $1.3775 on trading
platform EBS, its lowest level since Oct. 5, retreating further
from a more than eight-month high of $1.4030 hit last week.

The dollar had earlier edged higher against the euro 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 in a process
referred to as quantitative easing.

Investors covered stretched short positions in the dollar
as they scaled back some of their more aggressive quantitative
easing expectations. Fed minutes are scheduled to be released
at 2 p.m. EDT (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. Most think the Fed will announce its
second round of easing after its next meeting on Nov. 3.

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

The dollar fell 0.2 percent to 81.88 yen, not far from a
15-year low of 81.37 struck on Monday on electronic trading
platform EBS (JPY=EBS: ).

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 sight.

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 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. ) 0.4 percent to 113.45 yen
(EURJPY=R: ) and the Australian dollar was down 0.2 percent at
80.57 yen (AUDJPY=R: ).

The 20-day correlation for euro/dollar and U.S. equity
futures (ESZ0: ) remains a fairly robust 0.88, according to
Reuters calculation.

The dollar had sold off sharply in recent weeks as
expectations heightened that the Federal Reserve would pump
more cheap money into 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.

David Solin, a partner at Foreign Exchange Analytics, said
in the near term, the euro could continue to consolidate after
breaking below key support at $1.3860/90 — the multi-week
bullish trendline and the ceiling of the bullish channel since
June. A close below would greatly increase “the likelihood that
a multi-week top is indeed in place,” he said in a note.

But he added the euro remains in an uptrend and could
eventually rise toward the $1.4550/70 area.

FOREX-Euro down vs dollar but pares losses on ECB’s Weber