HONG KONG (Reuters) - The dollar probed a low 3 years against other currencies Wednesday before a decision of the Federal Reserve, which is expected to strengthen a position political ultra-easy and drive more capital floatation emerging Asian stock markets.
While the President of the Fed Chairman Ben Bernanke is expected to paint a prudent portrait on the largest economy in the world, on the other hand, the central banks in Asia and Latin America are still tightening monetary policy and some use currencies to check the pressure on prices.
The European Central Bank raised its policy rate this month for the first time since mid-2008 and is expected to increase rates at least once more this year.
That gave new legs to "carry trade", in which investors borrow in a currency low yield to invest in higher yielding or foreign currency assets.
Investors have been snapping the Australian dollar in high-performance and actions of South Korea (.)(Interest KS11), while showing the heavy dollar ahead of the Indonesia link.
The market has also added to rally bets dollar, especially against the euro and the Swiss Franc, on expectations that the Fed is if cling to a near zero interest rate policy even as it allows a bond of $ 600 billion purchase program wind down in June.
"The focus will be on the inaugural conference of the press and knowledge if Bernanke moves along the scale of the Dove-hawk,", said Michael Sneyd, analyst at Societe Generale.
"Attention will be also on comments to how the Fed might meet the budgetary tightening U.S.." All-in-all, the meeting is likely to give the green light for risk appetite and dollar bears continue to be downward. ?
The dollar index (.)(DXY), which tracks its performance against a basket of currencies, hit the lowest since August 2008 to 73.483, before cutting a few losses.
FLOW OF PICK UP
Asian shares rose after strong gains posted by signs of the day to the next U.S. driven by better than expected interpretations of corporate heavyweights U.S.. Future actions U.S. increased 0.1%, which suggests a higher open on Wall Street.
Index of the Korea of southern reference ABN (.)(KSII) reached a record for the session in third consecutive before giving back some progress, as investors took profits on shares of automaker. It ended flat. Shares of Hong Kong (.)(HSI) rose, supported by a broad rally in financials before the results of Chinese banks.
The MSCI Asia Pacific index sharing outside the Japan (.)(MIAPJ0000PUS) reached its highest level since January 2008 and is an increase of 0.5% on the day.
The Japan Nikkei (.)(N225) closed up 1.4%, supported by actions best rebounds of major exporters. But he may face downward pressure after the Standard & Poor rating agency revised its Outlook on the sovereign debt of the Japan to negative.
Offshore flows into non-developed Asian markets have resumed after a collapsed in January, with the two markets bond and fund emerging groups extending their longest streaks influx since mid-January, according to EPFR Global Fund tracker.
The order book for 10 years labels obligation awaited of the Indonesia has increased by about 5 billion dollars for a question should be between $ 1 billion to 1.5 billion in size, said IFR. The Indonesia markets have been a favorite among global investors by the country of relatively high yields, decent economic and population growth.
China lets yuan rise, a reassessment of post-2005 high triggering gains in emerging Asian currencies.
Help the case of carry trades, the Australian dollar murdered by a new 29-year peak above $1.0800 per dollar after higher than expected first quarter, inflation has suggested the Central Bank will eventually regain the tightening.
WITHDRAWAL OF MONEY
The rising dollar woes have been exacerbated by a recent decrease in the yields of U.S. Treasury as merchants rate would bet that the Fed tightening would be a slow and gradual.
In the Asian time, the performance of the 10-year note U.S. was 3.32 per cent, just over a minimum of a month of 3.31% before the Fed's decision. Ten-year yields are about 30 basis points since the summits of this month.
Markets of contents first, money cash bounced 0.9% to about $46 per ounce level after having dropped by close to 5% of the overnight. High volatility and the expiry of options U.S. of money added to the intensity of the decline of precious metal.
Have despite the withdrawal sharp silver that shaken on other goods, Brent held above the $124 per barrel line, the stain of violence Syria disorders civil war Libya, and Yemen contributed to the limit of feeling bearish on a slide in prices.
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