Reuters: US Dollar Report: FOREX-Euro little changed vs dollar ahead of Fed minutes, ECB

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FOREX-Euro little changed vs dollar ahead of Fed minutes, ECB Apr 3rd 2012, 13:07 Tue Apr 3, 2012 9:07am EDT * Trend for yen weakness seen remaining intact * Euro little changed vs dollar; Fed, ECB meeting awaited NEW YORK, April 3 (Reuters) - The dollar was little changed against the euro ahead of the release of U.S. central bank meeting minutes later on Tuesday, with investors reluctant to make big bets ahead of the European Central Bank meeting later in the week. Trading was descibed as quiet in pre-Easter trade, with the market focus on the U.S. Federal Reserve minutes from March that could provide clues on policymakers' inclination to take further steps to ease policy, which would weigh on the dollar. The ECB policy meeting is on Wednesday with analysts saying a hawkish message from the bank on the need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost. But many investors were still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain. "There hasn't been a risk event to push the dollar one way or another," said John Doyle, currency strategist at Tempus Consulting in Washington. "Later on today we get a peek at the Fed minutes but not expecting any surprises there, after that we are holding for the Europeans." The shared currency was little changed against the dollar at $1.3316, closer to the session low of $1.3298 than the session peak of $1.3367. Federal Reserve minutes due later in the session are expected to suggest a stand-by approach, with the Fed likely to warn that premature tightening would be risky, while keeping an open-minded but uncommitted view on further easing. Fed officials on Monday signaled little appetite for further monetary steps to stimulate U.S. growth in an economy that is gradually strengthening. However, Chairman Ben Bernanke said last week that more stimulus would remain an option. Since the mid- to late-March rally from $1.3000 to just below $1.34 fizzled out, the euro has stayed in a relatively tight $1.3250-3400 range. Many analysts expect it to move lower if it breaks below that range. "After the ECB meeting the euro could go higher in the very short term, above $1.34, before retracing lower, especially if the ECB remains in wait-and-see mode," said Asmara Jamaleh, currency strategist at Intesa Sanpaulo in Milan. Jamaleh warned it could fall towards $1.30 within a month. The euro was last little changed against the Swiss franc at 1.2033 francs but still near a two-month low as traders pushed the shared currency closer to the 1.20 franc floor set by the Swiss National Bank last year. YEN SWINGS The dollar was last up 0.1 percent at 82.15 yen recovering from a drop to a low of 81.54 yen, its weakest since March 9. Analysts said the broader trend for the yen to weaken remains intact following the Bank of Japan's unexpected easing of monetary policy in February. Speculation that the Fed could tighten its own policy faster than previously expected - and hence raise the return for holding dollars - have also weighed on the Japanese currency. "People have been buying into the idea that the yen could weaken and perhaps we have seen the strongest period for the yen," said Dag Muller, technical analyst at SEB in Stockholm. "But in the near term the yen could succumb to more of a correction from short-term exaggerated levels." The Australian dollar was down 0.4 percent at US$1.0371 , cutting earlier gains, after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent and suggested a bias towards easing. Link this Share this Digg this Email Reprints

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