Wednesday, June 24, 2009

Expectations from FOMC

The dollar and euro gained slightly against the yen in Tokyo on Wednesday as trust funds of Japan purchased those units to buy overseas assets. As dealers state, anticipation of such investments, which the trust funds regularly make at month's finish, prompted some short-term foreign exchange traders to buy the dollar and euro earlier the morning. Many players were reluctant to make big bets, particularly on the dollar, ahead of a U.S. Federal Open Market Committee meeting scheduled for later in the global day.

That happens because the FOMC statement is forecasted to contain few dollar-positive cues, as it seems to be much more cautious about the outlook of an economic rise than market players, dealers said. That would also confirm the opinion that the Federal Reserve will take more time before deciding to end its ultra-low 0-0.25% policy Federal Funds Rate. Currency market players said, after the meeting of FOMC the dollar may also further decline against the yen as Japanese firms repatriate overseas earnings ahead of six months at the end of June.

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