Dollar Weaker In Asia As Fed Policy Ahead, Kiwi Up After Data
The dollar was weaker against the the yen in Asia on Wednesday and the kiwi got a bump from better than expected current account figures as the Fed gets ready to detail its policy views and with investors awaiting the latest Bank of Japan policy review due on Thursday.
The policymaking FOMC will announce plans to begin unwinding its $4.5 trillion bond portfolio at the conclusion of its meeting on Wednesday.
As well as plans for balance sheet unwinding, the Fed’s Summary of Economic Projections and dot-plot are expected garner much of the attention, as investors are keen to assess whether the slowing pace of inflation has altered the central bank’s longer-term view on interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.13% to 91.50.
New Zealand reported its current account balance for the second quarter with a deficit of 2.8%, compared with 3% seen on a NZ$7.49 billion gap on year, narrowe than the NZ$8.08 billion expected. Japan reported its trade balance for August at ¥114 billion, compared with a ¥94 billion surplus seen.
Overnight, the dollar was roughly unchanged against a basket of major currencies on Tuesday as a mixed report on U.S. housing activity weighed on sentiment but easing geopolitical uncertainty limited losses in the greenback.
The dollar came under pressure after a pair of mixed reports on the U.S. housing sector tapered investor expectations of solid third quarter-growth.
The Commerce Department said Tuesday U.S. homebuilding fell 0.8% to a seasonally adjusted annual rate of 1.18 million units in August, well below economists’ estimates of a 1.7% rise.
The report also highlighted a sharp 5.7% rise in building permits to a rate of 1.3 million units. That was the highest level since January, beating forecasts of a 0.8% decline.
Downside momentum in the dollar was limited, however, as it made strong gains against its safe-haven counterparts like the yen and Swiss franc amid fading geopolitical uncertainty on the Korean Peninsula.