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FOREX-Dollar gains before Fed minutes, euro stays weak – Reuters news and update details. I hope you will find useful information for making trading decision today.
* Euro weak, prospect of quick German court ESM ruling dim
* Dollar recovers in positioning ahead of FOMC minutes
* Euro at record low vs Aussie dlr, 3-1/2-year low vs pound
NEW YORK, July 11 (Reuters) - The dollar gained on
Wednesday, sending the euro to a fresh two-year low ahead of the
release of minutes from the U.S. Federal Reserve's June meeting
in thin liquidity as investors adjusted positions.
The dollar had been weak for most of the global session with
investors cautious there may be hints of another round of asset
buying in the coming months to stoke growth in the U.S. economy.
But with hours to go until the Fed release, the dollar
recovered.
The euro fell against most major currencies on unease over
how policymakers will tackle the debt crisis after it appeared
there would be no quick judgment from a German court on the euro
zone's bailout fund.
As well as the two-year low against the dollar, it dropped
to a three-and-a-half-year low against the UK pound and a record
low versus the higher-yielding Australian dollar.
Alongside doubts fed by the debt crisis, the euro zone
common currency remained under pressure after the European
Central Bank's decision to cut interest rates last week,
bringing the deposit rate to zero.
The FOMC minutes "will be eagerly awaited by market
participants for clues regarding the outlook for monetary
policy," said Eric Theoret, currency strategist at Scotiabank in
Toronto. "Clues regarding the outlook will arise from the
discussion of other, more active measures that some of the more
dovish activist policymakers may have sought to pursue."
The euro was down 0.1 percent against the dollar at
$ 1.2236, not far from the low of $ 1.2225 and analysts cautioned
about a possible test of the June 2010 trough of $ 1.1875.
The Fed minutes, due for release at 2 p.m. EDT (1800 GMT),
will throw more light on the central bank's plans after U.S.
policymakers expressed differing opinions on the need for more
easing.
"If we do get some announcement of more QE (quantitative
easing) in the U.S. then it will provide support for euro/dollar
and we could see a squeeze of short euro positions," said Paul
Robson, currency strategist at RBS in London.
"But the euro will stay weak on low yield, weak growth and
debt uncertainty."
Analysts said any renewed rise in Spanish and Italian
government debt yields could push the euro down further as
concerns about political hurdles and scepticism over the euro
zone's decision-making process grow.
The ECB's rate cut removed a pillar of support for the euro,
raising chances it could become a funding currency of choice for
buying higher-yielding assets.
The euro fell to its weakest against sterling
since late 2008, while it hit an all-time low against the
Australian dollar.
The Australian currency also gained against the U.S. dollar
, backed by its higher Australian yields. It was last up
0.5 percent at $ 1.0241.
UNCERTAIN ROAD AHEAD
Some market players had been hoping for a quick ruling from
Germany's Constitutional Court on whether the European Stability
Mechanism and planned changes to the euro zone's budget rules
were compatible with German law.
But the decision looks likely to take several weeks, with
Finance Minister Wolfgang Schaueble saying he hoped a judgment
would be passed before the autumn.
"People will be aware the non-decision we have got (from the
court) might be a severe problem if yields really pick up and
then euro/dollar will come under pressure," said Lutz Karpowitz,
currency strategist at Commerzbank in London.
There were also concerns about Italy, whose Prime Minister
Mario Monti said on Tuesday the country could be interested in
tapping the euro zone's rescue fund to ease its borrowing costs.
The euro fell to a five-week low against the yen
but recovered to trade 0.3 percent higher at 97.55 yen.
The dollar recovered to trade 0.4 percent higher against the
yen to 79.70 yen holding well above chart support at its
200-day simple moving average at 78.98, as investors positioned
ahead of the outcome from the Bank of Japan's two-day policy
meeting beginning on Wednesday.
The BoJ is expected to hold off on easing monetary policy
despite moves in that direction last week by central banks in
the euro zone, Britain and China.
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