Dollar Dips On Profit Taking Ahead of Fed Meeting

By James Ramage 

        The dollar edged lower against the euro and the yen as investors booked profits on the U.S. currency's recent gains one week before the Federal Reserve's policy-setting committee meets to discuss interest rates and the economy.
        On Thursday, the dollar declined 0.6% versus the common currency, with one euro buying $1.0990. The greenback slipped 0.1% against the yen to Yen123.80.
        The Wall Street Journal Dollar Index, which measures the greenback against a group of 16 widely traded currencies, slid 0.1% to 88.23. The index had gained 5.4% from May 15 to Monday, but has fallen 0.5% since.
        The dollar dipped as investors took profits ahead of longer-term expectations for a stronger greenback. Many analysts and money managers predict the U.S. economy will regain its footing, which will persuade the Fed to raise interest rates for the first time in nine years.
        The central bank could shed new light on its intentions for U.S. rates when it concludes its two-day policy meeting next week, on July 29.
        The Fed has signaled that it could raise interest rates as early as September, but investors have been forecasting that the central bank most likely will move at its December meeting. Higher U.S. rates will make the dollar more attractive to yield-hungry investors.
        Investors will parse the meeting's statement for any indications by committee members that the central bank is preparing to increase rates sooner than consensus expects, said Vassili Serebriakov, currency strategist at BNP Paribas.
        "The Fed may acknowledge that some parts of the economy are doing better, " Mr. Serebriakov said. "I don't think the market expects this meeting to set up a September hike."
        If the Fed elects not to tighten credit conditions in September, the dollar could trade in its current ranges against its peers over the next few months until the central bank's December meeting, he added.
        The dollar pared some losses against peers after news that the number of U.S. workers filing applications for jobless benefits dropped by 26,000 to a seasonally adjusted 255,000 in the week ended July 18, the Labor Department said. Initial jobless claims fell to the lowest levels since the week of Nov. 24, 1973; economists had predicted 278,000 new claims.
        (END) Dow Jones Newswires

        July 23, 2015 13:22 ET (17:22 GMT)

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