Tuesday January 27, 10:16 PM
Dollar mixed ahead of Fed announcement
NEW YORK (AFP) - The dollar held in a narrow range Tuesday as currency traders awaited the outcome of a Federal Reserve meeting and shrugged off weak US economic data.
The euro was quoted at 1.3159 dollars at 2200 GMT compared to 1.3186 dollars in New York on Monday.
The dollar fetched 88.93 yen against 89.07 yen on Monday.
The US central bank's Federal Open Market Committee was set to conclude a two-day meeting on Wednesday. Although the Fed cannot lower rates from the base rate near zero, traders remained guarded.
The central bank, which has set its base rate at a range of zero to 0.25 percent, was expected to consider new efforts to stimulate lending and economic activity, possibly by expanding its purchases of securities on the open market.
"The only way for Wednesday's FOMC rate decision to hurt the dollar would be if the central bank announces that they will be purchasing long-term US Treasuries in size or if they add more ingredients to their alphabet soup of new programs," said Kathy Lien at Global Forex Trading.
"There is nothing to support the dollar on the upside as the Fed is not expected to start talking about raising interest rates."
There was little reaction to news that the Conference Board consumer confidence index tumbled to 37.7 in January, the weakest on record, and a survey showing a record year-over-year decline of 18.2 percent of home prices in the 20 largest US metropolitan areas.
David Song at Forex Capital Markets said traders will carefully examine the Fed statement for its outlook on the US economy and how long the recession will last. He said an optimistic picture might help the dollar.
Nonetheless, he added that the dollar and yen would continue to be seen as safe havens from financial turmoil.
"As risk trends continue to dictate price action in the forex market, the US dollar should continue to benefit from safe-haven flows as investors remain risk averse," Song said.
Sterling kept up its rebound after British bank Barclays (LSE: BARC.L - news) said Monday it expected a 2008 pre-tax profit of about seven billion dollars and insisted there was no need for a government bailout.
In late New York trade, the dollar stood at 1.1424 Swiss francs from 1.1371 late Monday.
The pound was at 1.4133 dollars after 1.3994.
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