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GLOBAL MARKETS-Dollar hits 3-year low before Fed, Asia stocks up

Published 04/26/2011, 09:05 PM
Updated 04/26/2011, 09:08 PM
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* Fed may whet hunger for risky assets

* Stocks rise helped by strong Wall Street earnings

* Silver rebounds after sharp losses

By Saikat Chatterjee

HONG KONG, April 27 (Reuters) - The U.S. dollar plumbed a near 3-year low against other major currencies on Wednesday before a Federal Reserve decision where it is expected to reinforce its ultra-easy policy stance while stocks in Asia's developed markets rose, tracking a strong close on Wall Street.

Market players added bearish dollar bets, especially against the euro and the Swiss Franc on expectations the Fed will cling to a near-zero interest rate policy even as it lets a $600 billion bond purchase program wind down in June. [ID:nN1941922]

"Focus will be on the inaugural press conference and whether Bernanke is shifting along the dove-hawk scale," said Michael Sneyd, analyst at Societe Generale.

"Attention will also be on comments for how the Fed may respond to U.S. fiscal tightening. All-in-all, the meeting is likely to give the green light for risk appetite and for dollar bears to continue to be bearish."

The dollar index , which tracks its performance against a basket of major currencies, hit the lowest since August 2008 at 73.483, before cutting some losses in early Asian trading.

Shares rose, taking a leaf from the robust gains posted by U.S. indices overnight, which was helped by better than expected performances from Ford Motor Co , 3M Co and United Parcel Services Inc .

Japan's Nikkei was up more than a percent while Australia's benchmark index rose after a five-day holiday weekend. MSCI's index of Asia Pacific shares outside Japan hovered just below a three-year peak hit last week.

U.S. Treasury yields edged up after recent drops with the 10-year yield just above a one-month low of 3.32 percent before the Fed decision.

In commodity markets, spot silver paused around the $46 per ounce level after falling by nearly 5 percent overnight.

High volatility and the expiry of U.S. silver options added to the intensity of the decline of the precious metal which nearly doubled in value between the January lows and Monday's peak.

Despite the sharp pullback in silver which rippled over into other commodities, U.S. crude held above the $124 per barrel line, rising from recent lows, as Libya's civil war and violence-tinged unrest Syria and Yemen helped limit bearish sentiment on a price slide.[ID:nLDE73P0O7] [ID:nLDE73P0KX]

* For Reuters Global Investing Blog, click on

http://blogs.reuters.com/globalinvesting

* For the MacroScope Blog, click on

http://blogs.reuters.com/macroscope

* For Hedge Fund Blog, click on

http://blogs.reuters.com/hedgehub (Additional reporting by Ian Chua in SYDNEY; Editing by Kevin Plumberg)

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