Forex - US dollar flat in Sydney morning trade; tight ranges until FOMC

Forex - US dollar flat in Sydney morning trade; tight ranges until FOMC

	Published : Wed, 09 May 2007 01:25 By : Agencies Print this Story

SYDNEY (XFN-ASIA) - The US dollar was little changed against the yen and euro here as currency markets trade in narrow ranges ahead of tonight's Federal Open Market Committee meeting, dealers said.

While no change is expected in the Federal funds rate from 5.25 pct, the focus will fall on the central bank's outlook statement and any possible changes to forecasts for growth and inflation ahead.

At 9:55 am Sydney (2355 GMT), the dollar was at 119.95 yen from 119.96 in late New York trade while the euro was at 1.3542 usd, slightly lower from 1.3543 in New York.

Dealers said the euro fell in overnight trading after data showed German industrial production for March fell 0.1 pct from the 0.9 pct expansion in February. The US dollar ended steady against the yen after an initial sell-off.

In other data, US wholesale inventories for March rose just 0.3 pct compared to market expectations of a 0.4 pct increase and the 0.5 pct rise in February.

CMC Markets chief analyst Ashraf Laidi said his firm still anticipates tonight's FOMC meeting to be negative for the US dollar due to a possible easing in the Fed's hawkish outlook.

However, he added, currency speculators are unwilling to accumulate new long positions in the euro unless the FOMC statement presents them with convincing reasons to do so.

Meanwhile, GFT senior analyst Ian Copsey noted Japanese traders are having a quiet return after the Golden Week holidays.

He said the yen has found support on comments by German Finance Minister Peer Steinbrueck who said that the yen's value should reflect the Japanese economic recovery and that the US economy should have greater influence on foreign exchange developments.

'The yen is due to strengthen over the next two months and it will be worth watching out for downward pressure (in the US dollar) which can start at any time,' Copsey said.

Sydney 9:55 am (2355 GMT)

US dollar

119.95 yen

1.2182 sfr

Euro

1.3542 usd

162.43 yen

1.6497 sfr

0.6805 stg

Sterling

1.9896 usd

238.72 yen

2.4238 sfr

Australian dollar

0.8272 usd

0.4159 stg

99.230 yen

New Zealand dollar

0.7349 usd

paul.daniel@xfn.com