Daily FX Wrap

The US Dollar posted early morning gains today, as traders took long positions before Wednesday’s FOMC interest rate announcement. Many experts expect the Fed to reiterate its concern about rising U.S. inflationary pressures. The Federal Open Market Committee is widely expected to hold its benchmark interest rate steady at 5.25 percent for the third consecutive meeting, so the Fed's accompanying statement will remain the focus of the market's attention. Turing to the Japanese Yen, Japan's vice-minister for international affairs Hiroshi Watanabe stated "I see no reason for a further deterioration in the yen given the strength in the Japanese economy," Watanabe continued to say that he had little fear of the economy "tipping" any time in the next two years. Japan's current economic expansion is on-track to become the longest in the postwar era. Look for position squaring to be the feature of Tuesday’s trade, as traders await the Fed’s announcement.