Dollar mixed ahead of Fed meeting

AP News
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Posted: Apr 25, 2011 3:38 PM
Dollar mixed ahead of Fed meeting

The dollar was mixed against other major currencies Monday ahead of a key meeting of Federal Reserve policymakers that could affect how investors think the central bank will act later this year.

The euro edged up to $1.4585 late Monday from $1.4550 late Friday, less than a cent shy of a 16-month high of $1.4648 set last week. The British pound dipped to $1.6505 from $1.6516, while the dollar was worth 82.24 Japanese yen from 81.90 yen.

The Fed, which meets Tuesday and Wednesday, is expected to say it will keep interest rates near zero and that its $600 billion bond-buying program, designed to help keep rates low, will continue until its scheduled end in June.

The Fed's super-low rates have weighed on the dollar as other central banks begin raising interest rates because of inflation fears. Increasing rates tend to support demand for a country's currency.

Investors will watch for hints Wednesday from the Fed's statement and from Chairman Ben Bernanke's first press conference about possible future actions to fight rising energy and food prices. Any "tightening" of monetary policy, which would make credit harder to get, could support the dollar.

The current value of the dollar doesn't reflect the possibility that interest rates will rise as the Fed stops buying bonds, said UBS currency strategist Mansoor Mohi-uddin in a research note.

"We remain very wary of chasing the greenback lower from current levels," Mohi-uddin said.

In the U.S., a housing report was slightly more positive. New-home sales rose 11 percent in March from the previous month to a seasonally adjusted rate of 300,000 homes, according to the Commerce Department. That pace is still far below what economists consider a healthy level.

In other trading Monday, the dollar traded at 95.44 Canadian cents from 95.45 Canadian cents and fell to 0.8809 Swiss franc from 0.8860 Swiss franc.