The dollar and yen rose against most of their major counterparts before a Federal Reserve statement that will signal whether the world’s biggest economy needs additional stimulus measures.
The yen climbed after the Bank of Japan kept its interest rate and policy unchanged. Higher-yielding currencies, including the New Zealand dollar and South African rand, fell after China said the pace of property-price gains and import-growth slowed. The dollar remained strong as data showed the productivity of U.S. workers unexpectedly fell in the second quarter, Bloomberg reports.
Still, some investors were cautious that the auction may get a poor reception if the U.S. Federal Reserve doesn't announce additional easing measures after its meeting ends later Tuesday. Expectations have grown that the Fed could reinvest funds raised from maturing mortgage-bond holdings, rather than paring the size of its investment portfolio, effectively easing policy.
Because market conditions could change dramatically after the Fed announcement, just-in-case hedging demand was strong, said RuiXue Xu, a rates strategist at RBS Securities Japan, Wall Street Journal informs.