Dollar Remains Higher Against Euro Before FOMC Minutes This Week

Frankfurt (Apr 7)  The dollar remained stronger against the euro following a three-week rally before the U.S. central bank releases minutes this week of the Federal Open Market Committee’s March meeting.

Federal Reserve Bank of St. Louis President James Bullard is due to speak today. Leveraged funds boosted their bearish bets on the U.S. currency to the most in almost four years last week, spurring speculation it will strengthen as some of those positions are reversed. The yen maintained a gain against the dollar as the Bank of Japan today starts its first policy meeting since the nation raised the sales tax on April 1.

“The FOMC minutes might add a bit more hawkish color around what the individual members are thinking,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. “When positioning is extremely short, to me that’s a signal that there’s more risk that they buy back those shorts,” he said, referring to bets on a decline in the dollar.

The dollar was at $1.3702 per euro as of 8:47 a.m. in Tokyo after strengthening 0.3 percent last week to $1.3705. The yen was little changed at 103.34 per dollar after rising 0.6 percent on April 4. It traded at 141.61 per euro following a 0.7 percent jump at the end of last week to 141.54.

Leveraged funds held 34,199 more contracts betting on a decline than wagers on a gain in IntercontinentalExchange Group Inc.’s Dollar Index as of April 1, data from the Commodity Futures Trading Commission in Washington show. That’s the most since the figures became available in July 2010.

The Fed is due to release on April 9 minutes of its March 18-19 meeting at which it reduced the monthly pace of bond purchases by $10 billion to $55 billion.