The U.S. Dollar edged higher in the Asian session following the release of better than expected economic data which led to increased speculation that the Fed might rethink the timing of its QE tapering scheme. According to an industry report, business activity in the U.S. services sector ticked higher last month, despite the federal government’s 16-day closure. That news helped to push yields on U.S. Treasuries to a 3-week high and further helped the U.S. Dollar broadly rebound.
As reported at 11:07 a.m. (JST) in Tokyo, the U.S. Dollar Index, a gauge by which investors measure the greenback’s relative strength against its major rivals, edged up 0.2% to 80.709 .DXY, moving closer to Monday’s 2-month high of 80.930 .DXY. The USD/JPY pair also traded higher at 98.55 Yen, moving away from yesterday’s session low of 98.16 Yen. With pressure mounting on the common currency Euro, the EUR/USD pair remained close to the recently struck 2-month low of $1.3442 and traded at $1.3472.
ECB’s Dovish Leaning Expected
Market players remain wary that the European Central Bank’s policy makers will take action to curtail the potential deflationary trend by either announcing an imminent interest rate cut or the likelihood of one at the December policy meeting. Currency strategists are certain that the ECB will at least make their intentions known and are calling on their investors to take bearish positions. The ECB’s decision will be announced tomorrow at 12:45 p.m. (GMT) while Mario Draghi’s customary speech will follow 45 minutes afterward.