Tomorrow's Bank of Japan and Federal Reserve meetings are serving to dampen activity in the foreign exchange market. The US dollar is little changed against the euro, yen, and sterling. The Antipodeans are firm.
Minutes from the recent RBA meeting provide no fresh insight. The central bank has an easing bias, which it is in no hurry to act upon or jettison. The Australian dollar is in the upper end of yesterday's range, but unable to extend above its (~$0.7575) high. Initial support is pegged near $0.7530.
The Kiwi is bid as milk prices have rallied ahead of today's auction. Intraday technicals warn of risk that the fact may be sold now that the rumor has been bought. Buying stalled near $0.7360. Support is seen in the $0.7300-$0.7310 area.
The dollar slipped a few ticks below yesterday's low against the yen. However, there is no momentum, and the range is narrow. There is great uncertainty of what the BOJ will do tomorrow. While much talk has been about its activity in the JGB market, new speculation is that may shift its focus in its ETF purchases away from the Nikkei 225 toward the Topix and Nikkei 400. Apparently, on such speculation, the Nikkei 225 edged lower while the Topix and Nikkei 400 posted modest gains after the markets re-opened from yesterday's holiday. Ahead of the BOJ, the JPY101.50-JPY102.00 range is likely contain the greenback.
The euro was confined to a little more than a 10-tick range in most of the Asian session but then staged a quick rally (1/3 of a cent) to almost $1.1215, which is a 50% retracement of the leg down since September 15. Initial support is pegged at $1.1170. The news stream has been light. Following the CDU's loss of support in two state elections this month, there is heightened speculation that Merkel may not run for a fourth term as Chancellor next year. However, in her post-mortem yesterday, we detect a subtle shift in Merkel, a master tactician....MORE