FX Mixed Before FOMC, Yen Surges
The dollar was mixed in Monday trading, higher against the euro but sharply lower versus the yen as traders remained cautious ahead of tomorrow’s FOMC monetary policy announcement scheduled for 2:15 PM EST.
The Fed is widely anticipated to lift its benchmark interest rate by 25-basis points to 4.75%. Since it is also Fed Chairman Bernanke’s first meeting presiding as the new chief, markets will closely scrutinize the tone of the accompanying policy statement. Furthermore, clues on the Fed’s view of recent data, as well as future policy stance will be analyzed.
While the Treasury auction for 2-year notes at a yield of 4.73% attracted tepid demand, it is worth noting that foreign appetite had not waned. Foreign participation in the auction rose for a third consecutive month. Indirect bidders, which encompass foreign central banks as well, encompassed almost 36%.