Reuters: US Dollar Report: FOREX-Dollar edges higher as Fed tapering seen on track

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FOREX-Dollar edges higher as Fed tapering seen on track Aug 22nd 2013, 01:08 Wed Aug 21, 2013 9:08pm EDT * Dollar firmer, seen supported by rise in U.S. yields * Fed sheds little light on timing of QE tapering * But analysts say September tapering still possible * Talk of hedge fund buying in dollar/yen -trader By Masayuki Kitano SINGAPORE, Aug 22 (Reuters) - The dollar edged higher versus the yen and euro on Thursday after minutes of the Federal Reserve's meeting in July suggested that the U.S. central bank was still on track to start tapering its asset-buying programme as early as next month. The minutes showed members of the Federal Open Market Committee had different opinions as to when the Fed should start winding down its bond purchases. The overall view, however, was that the minutes did not materially change the market's expectation that the Fed could start tapering its monetary stimulus as early as September. The dollar rose 0.2 percent against the yen to 97.90 yen . The greenback seemed to be drawing strength from a push higher in U.S. yields, said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo. "I think the dollar is purely being bought on the back of a widening in interest rate differentials," Maeba said, adding that there was some talk of hedge fund buying of the dollar versus the yen this morning. The moves on Thursday morning were a departure from a recent pattern of the yen pushing higher when Tokyo shares weaken, he added. Japan's Nikkei share average was down 1 percent. The yen has been inversely correlated to moves in Japanese equities in recent months, with the Japanese currency tending to rise when the Nikkei falls. The euro slipped 0.1 percent to $1.3339, down from a six-month high of $1.3453 hit on Tuesday. Analysts say August nonfarm payrolls data, due on Sept. 6, will be closely watched by investors and policymakers to determine whether the improvement in the labour market is enough to justify scaling back the stimulus. "The tone of the minutes does not meaningfully reduce the risk of a September taper. They will likely be seen as positive for the dollar and negative for bonds and stocks," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Helping lend support to the dollar was a rise in U.S. bond yields, which can be seen as increasing the attractiveness of dollar-denominated assets. The U.S. 10-year Treasury yield last stood at about 2.894 percent, hovering near a 2-year high of 2.9 percent set this week. Link this Share this Digg this Email Reprints

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