Dollar edges up ahead of Fed decision; kiwi jumps on strong jobs data

© Reuters. FILE PHOTO: U.S. dollar notes to see the figure in this image

By Lisa Twaronite

TOKYO (Reuters) — The dollar edged higher on Wednesday as investors policy meeting for clues about future tightening awaited the outcome of the Federal Reserve, while the besieged new Zealand dollar came back roaring to life on the strong jobs data.

The dollar index, which complemented the traces of the greenback versus a basket of six major rivals, 0.1% 94.680, but it remained shy on Friday, the three-month high of 95.150.

The new Zealand dollar stole the Asian spotlight, rising 0.9 percent to $0.6906 after touching a one-week high of $0.6915, supported by data showing that the country, the unemployment rate fell more than expected to a nine-year low of 4.6 percent.

The kiwi came under pressure in the last few weeks, the fears of the new Labour-led coalition government is left-oriented policies, including a squeeze on foreign investment and migration.

«The kiwi was oversold on the financial uncertainty and about what the Labour-led government would be adopted, to be suppressed so that the market was too short, and tend to be,» said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.

«The reality is that the government is far from the kind of extreme ideology, you see, in some places, like in Europe,» she said.

Later on Wednesday, the US Central Bank is expected to leave interest rates unchanged. But investors will be watching for any new indications that the Fed will increase interest rates next month as expected, and the timing of movements in the year 2018.

«The expectations of the market are pretty much in line with the Committee’s own projections of the last interest-rate increase this year, so there is a lot of need for a wave no banners or otherwise, to the attention to the upcoming measures,» Marshall Gittler, chief strategist at ACLS Global said in a report.

Later on Wednesday, the Republican legislators, the introduction of a bill to reduce the taxes, and the Treasury could Department, with its repayment plans. The government is expected to increase the size of your regular auctions before more funds are needed, a widening deficit, and as the Fed reduces its balance sheet.

Before the US labor data on Friday, the other characters believe were of the view that the economy is gaining momentum.

Consumer confidence jumped to a near 17-year high last month, house upbeat to keep, what are the labour market and business conditions, which could underpin the consumer spending and to stimulate the economy in the last three months of the year. Other data showed that wage growth accelerated in the third quarter.

Before a trip to Asia, President Donald Trump is expected to announce, to accept his choice for the new Fed Chairman on Thursday with a news tip, Fed Governor Jerome Powell to be probably nominated, if the current Fed chair Janet Yellen’s term of office ends in February.

The dollar added 0.2 percent to 113.85, but it remained shy of its three-month high of 114.45 yen on Friday.

The Japanese markets are closed for a national holiday on Friday, with many investors in Tokyo, positioning ahead of that, market participants said, although most were wary of taking aggressive bets ahead of the U.S. jobs data.

As widely expected, the Bank of Japan kept policy steady on Tuesday, with inflation still far from its 2% target. BOJ Governor Haruhiko Kuroda stressed that he saw no immediate need to exit its ultra-easy policy have even begun as the Fed and the European Central Bank, to relax their appeal.

Euro 0.1 percent, fell to $1.1632, still nurses his losses after tumbling to a three-month low of $1.1574 on Friday, a day after the ECB said it has renewed its bond purchases in September 2018.

The ECB will also cut its monthly purchases by half, to 30 billion euros, starting in January, leading investors to bet that it will start raising interest rates until 2019.

The Bank of England interest rate decision on Thursday that many expect to bring their first rate increase in more than a decade.

The majority of economists by Reuters expect the Central Bank to increase their official cost of borrowing by 0.5 per cent, after last year, the 25-basis-point cut in the aftermath of the election to Leak out.

Sterling back 0.1 per cent against the dollar at $1.3274, after hitting a more than two-week high of $1.3293.

Bitcoin scaled a record high after CME Group Inc. (NASDAQ:CME), one of the world’s largest derivatives exchange operator, said on Tuesday it will be the introduction of a futures contract for the crypto money later this year.

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