By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) — The U.S. dollar slipped against the Japanese yen and the euro Wednesday, ahead of highly anticipated guidance from the U.S. Federal Reserve on what it plans to do with its bond-buying program.
The U.S. dollar /quotes/zigman/4868099/sampled USDJPY -0.0639% bought 95.22 yen, down from ¥95.30 late Tuesday in North American trade.
The euro /quotes/zigman/4867933/sampled EURUSD +0.0114% , meanwhile, inched back to $1.3391 from $1.3398. But with an intraday high of $1.3402, the euro had reached a level that was last seen in February, according to FactSet data.
The ICE dollar index /quotes/zigman/1652083 DXY -0.01% , which tracks the greenback against six rivals, moved up to 80.674 from 80.640. The WSJ Dollar Index /quotes/zigman/9625991 XX:BUXX -0.01% , which uses a slightly wider comparison basket, slipped fractionally to 72.66 from 72.67.
Fed Chairman Ben Bernanke was due to address reporters at the conclusion of the Fed’s policy meeting later Wednesday.
The dollar has been weaker recently on uncertainty over whether the Fed will decide to scale back the pace of its bond purchases, currently set at $85 billion a month, though some analysts have said the bond buying has generally weighed on the dollar. Read about how markets may react after the Fed decision.
The Fed’s purchases were more than doubled to $85 billion a month starting in January in a bid to stimulate economic activity, including encouraging job growth.
“In our view, the best way the Fed can boost confidence is by showing some themselves,” Wells Capital Management chief investment strategist Jim Paulsen said in a report late Tuesday.
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“The unconventional and unprecedented actions of continuing to keep short-term interest rates at zero and persistently adding to excess bank reserves, while probably of little additional help to economic fundamentals, does chronically fuel a nagging fear of ‘what does the Fed know we don’t,’” he wrote.
“The ‘act of tapering’ and beginning the process of policy normalization would speak loudly about the Fed’s own confidence in the future of this economic recovery,” Paulsen said.
The British pound /quotes/zigman/4867886/sampled GBPUSD -0.0162% slipped to $1.5632 from $1.5646 ahead of the Fed’s announcement as well as the release of minutes from the Bank of England’s policy meeting held earlier this month. The central bank decided to keep its key lending rate at 0.5%, and left the size of its own bond-buying program unchanged.
The Australian dollar /quotes/zigman/4867876/sampled AUDUSD -0.0026% fell to 94.80 U.S. cents from 95.00 U.S. cents on Tuesday.