The dollar was set for the highest closing level in four years versus major peers after Federal Reserve officials raised their target-rate forecast. The yen slid to a six-year low before the Bank of Japan governor speaks.
The greenback returned to levels unseen since the collapse of Lehman Brothers Holdings Inc. after Fed policy makers increased their median estimate for the key rate to 1.375 percent at the end of 2015 versus June's forecast for 1.125 percent. The pound remained higher as Scotland votes today on independence. The euro touched its weakest since July 2013 with the European Central Bank preparing to allot the first funds under its so-called targeted longer-term refinancing operations.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose 0.2 percent to 1,055.71 as of 1:33 p.m. in Tokyo, poised for the highest closing level since June 2010.
The U.S. currency climbed to 108.75 yen, the strongest since Sept. 8, 2008, before trading 0.3 percent higher at 108.67. It was little changed at $1.2864 per euro and touched $1.2835, the most since July 2013.
Considerable Time
The Federal Open Market Committee retained a commitment to keep interest rates near zero for a “considerable time” after winding down a bond-purchase program under the quantitative-easing stimulus strategy. It said in a statement a “significant underutilization of labor resources” remains.
Policy makers tapered monthly bond buying to $15 billion in their seventh consecutive $10 billion cut, staying on course to end the program in October.
Yellen, at a press conference after the two-day meeting, said the language of the low-rate pledge isn’t a form of calendar-based guidance. The odds the central bank will increase its benchmark interest-rate target to at least 0.5 percent by July 2015 were 78 percent, up from 73 percent at the end of last month, federal fund futures showed.
An interest-rate increase would be the first since 2006. The rate has been in a range of zero to 0.25 percent since December 2008.
Kuroda Speaks
BOJ Governor Haruhiko Kuroda is scheduled to speak today at the National Securities Industry Convention in Tokyo. A stronger dollar isn’t negative for Japan’s economy and the central bank will continue unprecedented monetary stimulus as long as necessary to achieve its target of 2 percent inflation “in a stable manner,” Kuroda said Sept. 16 in Osaka.
The pound held a gain since Sept. 15 before voters in Scotland decide today on the future of a political union that dates back to 1707. Voting ends at 10 p.m. local time. A final batch of opinion polls before the referendum showed the “no” campaign remained in the lead by a slim margin.
“Uncertainty around the final result is mounting,” Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo, wrote in an e-mailed note to clients today. “GBP will likely rebound further in case of a ‘No’ vote, though it has already seen some rebound in the past few days, while a ‘Yes’ vote would likely exert further downward pressure.”
ECB Loans
Sterling was little changed at $1.6265 after climbing 0.3 percent since Sept. 15 through yesterday to $1.6276.
The ECB will announce today the allotment of its first targeted lending program as part of its effort to stave off deflation in the euro area. Banks will receive 150 billion euros ($193 billion), according to the median estimate of analysts surveyed by Bloomberg News.
New Zealand’s currency added 0.2 percent to 81.09 U.S. cents. The nation’s economy grew at the fastest pace in 10 years in the second quarter, outperforming most major developed markets. Gross domestic product increased 3.9 percent in the second quarter from a year earlier, Statistics New Zealand said today. That beat the 3.8 percent median forecast in a Bloomberg survey of 10 economists.
Source: bloomberg.com
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