Dollar steady before Fed decision, Kiwi catapults
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[November 01, 2017]
By Jemima Kelly
LONDON (Reuters) - The dollar steadied
against a basket of major currencies on Wednesday as investors eyed a
policy decision from the U.S. Federal Reserve later in the day, while
New Zealand's battered dollar surged on stronger-than-expected jobs
Later on Wednesday, the U.S. central bank is expected to leave interest
rates unchanged. Investors will be watching for any new indications that
the Fed will resume raising rates next month as expected, and the timing
of any moves in 2018, but they do not expect the decision to produce a
large market reaction.
"Even a hint that policy should be adjusted in 'coming months' may not
have much of an impact on the USD rate curve since 23 basis points of a
25-basis-point rate hike (are) already priced for the December 13th
meeting," said ING's head of currency strategy, Chris Turner.
The dollar index, which tracks the greenback against a basket of six
major rivals, added 0.1 percent to 94.680 <.DXY>, though it remained shy
of Friday's three-month high of 95.150.
The euro was flat at $1.1642 <EUR=>.
Strategists said investors would be eyeing ADP U.S. jobs data later in
the day, ahead of Friday's all-important non-farm payrolls report.
They will also have eyes on Washington, where later on Wednesday
Republican lawmakers could introduce a bill to cut taxes and the
Treasury Department will release its refunding plans.
Investors will also be searching for clues on who might be the next Fed
chair. Ahead of a trip to Asia, President Donald Trump is expected to
announce his choice for the position on Thursday, with news reports
tipping Fed Governor Jerome Powell as likely to be nominated to take
over when Janet Yellen's term expires in February.
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U.S. dollar notes are
seen in this November 7, 2016 picture illustration. REUTERS/Dado
The New Zealand dollar stole the Asian spotlight, rising 1.2 percent to $0.6931
after data showed the country's jobless rate sinking to a nine-year low of 4.6
The kiwi had come under pressure in recent weeks on fears of the new Labour-led
coalition government's left-leaning policies, including a clampdown on foreign
investment and migration.
"The kiwi was oversold on fiscal uncertainty and about what the Labour-led
government would be enacting, so the market was short, and prone to squeezes,"
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
that you see in some places, like in Europe," she said.
Bitcoin, which has more than doubled in price since mid-September alone, hit
another all-time high, hitting $6,452 on the European Bitstamp exchange, boosted
by bets that it could enter the financial mainstream after CME Group said it
would launch bitcoin futures trading. <BTC=BTSP>
(Reporting by Jemima Kelly; Additional reporting by Lisa Twaronite in Tokyo)
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