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Forex - Dollar extends gains ahead as Fed meeting in focus

Published 09/21/2011, 08:16 AM
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Investing.com – The U.S. dollar was broadly higher against its major counterparts on Wednesday, as investors awaited the outcome of the Federal Reserve’s policy meeting, while concerns over a default by Greece persisted.

During European afternoon trade, the greenback was up against the euro, with EUR/USD shedding 0.43% to hit 1.3642.

On Tuesday, Greece’s finance minister said “good progress” had been made in a second round of talks with the European Union and International Monetary Fund and added that talks would continue this weekend.

The greenback was also higher against the pound, with GBP/USD falling 0.71% to hit 1.5622.

Earlier in the day, the minutes of the Bank of England’s September policy meeting showed that policymakers believed the economic conditions seen in the past month had strengthened the case for an "immediate" return to quantitative easing.

A separate report showed that U.K. public sector net borrowing rose significantly more-than-expected in August, climbing to GBP13.2 billion, above expectations for GBP11.4 billion.

Elsewhere, the greenback was down against the yen but was higher against the Swiss franc, with USD/JPY slipping 0.17% to hit 76.31 and USD/CHF rallying 0.78% to hit 0.8947.

Japanese Finance Minister Jun Azumi said earlier that he was closely watching markets and remained ready to take “bold” action on currencies if needed.

Meanwhile, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.42% to hit 0.9967, AUD/USD shedding 0.66% to hit 1.0209 and NZD/USD losing 0.57% to hit 0.8194.

Earlier in the day, government data showed that Canadian consumer price inflation rose more-than-expected in August.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.43% to hit 77.84.

The Federal Reserve’s Open Market Committee was to conclude its two-day policy meeting later in the day, amid speculation that Fed Chairman Ben Bernanke would announce plans to replace short-term Treasuries with long-term bonds, in a move known as Operation Twist.

Also Wednesday, the U.S. was to publish industry data on existing home sales.

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