Dollar Stable As Focus Shifts to Fed Meet Next Week

 
   By Kosaku Narioka 
 

        The dollar stabilized against other major currencies on Friday in Asia ahead of Japan's general election on Sunday and as the focus among investors shifts to U.S. economic conditions and the Federal Open Market Committee meeting next week.
        Market participants largely expect a victory for the Japanese ruling party, which would enable authorities there to continue their current economic programs that have sharply weakened the nation's currency.
        As such, if the result is as expected sharp market moves are unlikely, they say.
        Instead, the focus is if and how Federal Reserve officials would signal a rate hike by dropping their assurance that rates will stay low for a "considerable time."
        "The dollar's rising trend will remain intact if the Fed removes the reference to 'considerable time,'" said Atsushi Hirano, head of FX sales for Japan at Royal Bank of Scotland.
        The dollar stayed at Y118.68 as of 0455 GMT from Y118.65 late Thursday in New York, according to EBS via CQG. The euro was at $1.2399, compared to $1.2411. The British pound was at $1.5723 from $1.5730.
        While uncertainty remains how exactly the Fed will characterize its monetary policy outlook, "dip-buying" is likely in the dollar against the yen as long as U.S. stocks remain buoyant and only mild upward pressure is observed in shorter-term Treasury yields, said Shigetake Nakayama, senior manager of foreign exchange trading at Bank of Tokyo-Mitsubishi UFJ.
        Data showed Thursday U.S. retail sales climbed 0.7% in November from a month earlier, the strongest gain in eight months, boosting hopes for a brisk holiday retail season and lifting the economy's outlook.
        Mr. Hirano at RBS said recent drops in crude oils are likely positive for the U.S. economy in the long-run.
        For the rest of the day, U.S. data such as producer price index for November and University of Michigan consumer sentiment index for December are closely watched to gauge the strength of the U.S. recovery.
        Write to Kosaku Narioka at kosaku.narioka@wsj.com
        (END) Dow Jones Newswires

        December 12, 2014 00:30 ET (05:30 GMT)

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