Dollar Recovers After Sharp Decline

Asian markets are trading cautiously this morning as investors do not want to significantly change positions ahead of the start of the two-day meeting of the U.S. Fed.

On the Tokyo Stock Exchange, the Nikkei index was down about 0.4 percent at 7:30 AM, while stock prices in Hong Kong, South Korea, and Shanghai fell between 0.2 and 1 percent.

Stock indices in Australia and Singapore strengthened by about 0.2 percent, while the MSCI index of Asia-Pacific stocks, excluding Japan, was down 0.4 percent at 7:30 AM.

Caution prevails in Asian markets this morning as the two-day meeting of the leaders of the U.S. central bank begins tonight, who have been signaling for months that they might start reducing the purchase programs for government and mortgage bonds if the economic situation continues to improve.

“Trading is calm as investors do not want to significantly change positions before the Fed’s decision,” says Kenichi Hirano, a strategist at Tachibana Securities.

Although data shows that the growth of the U.S. economy has slowed in recent months, analysts expect a cut in stimulus measures. However, not as sharp as previously thought.

In a Reuters survey, analysts estimate that the Fed will reduce the bond purchase programs, worth $85 billion per month, by $10 billion.

In the currency markets, the dollar has somewhat recovered against the euro this morning, following yesterday’s sharp decline.

This morning, the euro exchange rate is around $1.3335, while yesterday at this time it reached $1.3382, the highest level in almost three weeks.

In relation to the Japanese currency, the dollar price slipped from yesterday’s 99.35 to 99.15 yen.

The euro exchange rate against the Japanese currency remains stable around 132.20 yen.

After falling by $1.6 on Friday, this morning the futures price of oil on the New York Stock Exchange slipped another 80 cents to $105.70 per barrel.