Dollar falls broadly on speculation of no change on Fed's near-zero language: Sept 17, 2014

Market Review - 16/09/2014 22:58GMT 

Dollar falls broadly on speculation of no change on Fed's near-zero language

U.S. dollar fell broadly against major currencies on Wednesday on speculation of no change on the Fed's near-zero language in the upcoming policy statement to be released on Thursday as traders cited WSJ video saying Fed will stick to near-zero rate language. The single currency jumped to 1.2985 and then 1.2995 in New York before retreating. The greenback fell to 106.81 before paring some losses. The British pound rallied to as high as 1.6310 in New York before retreating.

Despite initial brief drop to 106.93, U.S. dollar rebounded to 107.33 after comments from BOJ's governor Kuroda. Price later tumbled to 106.81 in New York on WSJ video saying Fed will stick to near-zero rate language but only to rebound to 107.22.

Bank of Japan's governor Kuroda said hard to control yen levels with Japan policy alone as FX rates also move on other factors such as U.S., European, Asian economic conditions; want to do our best to maintain FX stability via solid coordination between gov't, BoJ; we will maintain QQE to ensure economic conditions remain strong enough for firms to translate risks costs to consumers; recovery from post-sales tax hike has been quite slow for housing investment; strongly hope gov't keeps up efforts on growth strategy as third arrow of Abenomics becoming increasingly important for econ growth.'

The single currency traded in a volatile fashion on Tuesday. Despite retreating from Asian high at 1.2962 to 1.2923 in European morning, euro jumped to as high as 1.2995 in New York as traders cited WSJ video saying Fed will stick to near-zero rate language but selling interest below 1.3000 psychological knocked price lower later.

German Finance Minister Wolfgang Schaeuble said in an interview that the European Central Bank (ECB) has assured Germany it is not trying to manipulate the euro, adding he was not concerned about recent swings in the single currency's exchange rate. Schaeuble said "the president of the ECB confirmed in my presence in Milan (on the weekend) that the ECB is of course sticking to the agreements we have made in the framework of the G7 and G20."

The British pound swung wildly again on Tuesday ahead of Thursday’s Scottish independence referendum. Cable dropped briefly to 1.6162 in European morning and then jumped to as high as 1.6310 in New York due to dollar’s broad-based weakness.

U.K. PM David Cameron used his last visit to Scotland to implore Scots to remain part of the U.K. and warned that a breakaway vote would be irreversible. Cameron pleaded with voters not to use the Scottish independence referendum as a protest vote. "There's no going back from this. No re-run. If Scotland votes 'yes' the UK will split and we will go our separate ways forever," he told an audience packed with Conservative party supporters in Aberdeen. "Don't think : I'm frustrated with politics right now, so I'll walk out the door. If you don't like me I won't be here forever. If you don't like this government it won't last forever. But if you leave the UK that will be forever."

Wednesday will see the release of New Zealand's current account, Bank of England minutes, U.K. average earnings, claimant count unemployment, ILO unemployment, Swiss ZEW investor sentiment, eurozone inflation, U.S. core CPI, CPI, current account, NAHB housing market index, FOMC rate decision and monetary policy statement.