Reuters: US Dollar Report: FOREX-Euro near 3-wk high on Dutch debt sale, Apple results

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FOREX-Euro near 3-wk high on Dutch debt sale, Apple results Apr 25th 2012, 03:29 Tue Apr 24, 2012 11:29pm EDT * Apple results help risk appetite in Asia * Aussie bounces back from 2-week low hit on CPI data * Yen lower on easing safe-haven demand, importer selling * Outcome of Fed meeting later on Wednesday awaited * BOJ on Friday also in focus By Antoni Slodkowski TOKYO, April 25 (Reuters) - The euro hovered near a three-week high against the dollar on Wednesday after euro zone sovereign debt attracted decent demand and strong earnings from Apple boosted risk appetite, while focus turned to the outcome of a Federal Reserve meeting. The euro traded at $1.3196, close to levels not seen in three weeks, after hitting the previous session's low of 1.3145. Immediate resistance is at last week's high of 1.3225. Investors were relieved when successful auctions sent yields on Dutch, Spanish and Italian debt lower on Tuesday, a day after the government in the Netherlands collapsed in a crisis over budget cuts. Traders cited stop losses at 1.3230 in the common currency, while chartists suggested that if they get triggered, the euro would target resistance at the 61.8 percent retracement of its slide to 1.2995 from around 1.3386, coming in at 1.3236. Whether these levels are tested largely depends on the Federal Reserve, analysts said, which is expected to reiterate its intent to keep benchmark U.S. interest rates near zero through 2014 when it ends a two-day policy meeting on Wednesday. "Ahead of the Fed FOMC outcome today trading is likely to be relatively restrained, with the risk rally struggling to make much headway," said Mitul Kotecha of Credit Agricole Corporate and Investment Bank. "Assuming that the Fed does not alter its policy setting but instead only tinkers with its economic forecasts, the dollar will escape any further selling pressure," he said, adding he did not expect the bank would mention loosening monetary policy. Tentative improvement in risk appetite helped the greenback climb against the safe-haven yen and bounce back from the previous session's trough of 80.86 yen to 81.51 yen, up 0.2 percent on the day. Traders said the dollar was also supported by buying from importers, with Japanese corporations preparing for a series of holidays early next month known as Golden Week. BOJ MEETING Market players also positioned themselves ahead of a Bank of Japan meeting on Friday, when it is expected to ramp up asset purchases by up to 10 trillion yen ($123 billion) and in doing so may extend the maturity of government bonds it targets to around three years. "Foreigners have scooped up the dollar on the dip last night ahead of the BOJ decision on Friday. They, together with importers, are keeping the yen under pressure," said a senior dealer for a major Japanese bank. He added that unless the BOJ surprises the market, the dollar would find it hard to further muscle in on the Japanese currency. "If anything some knee-jerk yen buying is expected after the BOJ's decision. We are still ahead of the Fed, which could of course be a game changer, so many traders will take their final positions going into the BOJ once the Fed is out of the way," he said. Other risk-sensitive currencies, such as the Australian and New Zealand dollars, held gains made in early trade as Asian equities were supported after Apple Inc's results beat Wall Street estimates. The Aussie was barely changed at $1.0310, having pulled away from a two-week trough at $1.0247 hit after low inflation data the day before paved the way for a cut in domestic rates in May. Resistance is seen at the 200-hour moving average at $1.0349 and then a string of daily highs between 1.0385 and 1.0415, suggesting any gains in the currency would likely be hard won. The kiwi traded at $0.8115, with light profit-taking kicking in after it staged a powerful comeback from Wednesday's low of 0.8098. Link this Share this Digg this Email Reprints

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