Dollar Ticks Up ahead of Fed Meeting Outcome

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The dollar edged higher Wednesday as the US central bank winds up its two-day policy meeting, but anxiety over Britain’s vote on its future in the European Union hung over the market.

Analysts said it was unlikely that the Federal Reserve would announce a move on interest rates later in the day, as investors also eye Japanese and British central bank gatherings that wrap up Thursday.

“The potential Brexit fallout overwhelmingly dictates that the (Federal Reserve) should remain sidelined until July, if not longer,” Stephen Innes, a senior trader at Oanda Asia Pacific, said in a commentary referring to Britain’s possible exit from EU.

“The BoJ has surprised the market under (Governor Haruhiko) Kuroda’s leadership in the past, but in reality, with Brexit looming, the BoJ will keep their powder dry.”

With just over a week to go until Britain’s referendum, a series of polls have put the “Leave” camp in front, raising the possibility that its four-decade ties to the European bloc could be cut.

The prospect of one of the big three economies leaving the EU has led to warnings of a bloodbath on global trading floors, just as dealers struggle to recover from a China-fuelled rout that wiped out trillions of dollars at the start of the year.

“There’s certainly no dearth of opinion polls showing a lean towards a Brexit and the outcome is on a razor’s edge,” Innes said.

In Tokyo, the dollar ticked up to 106.18 yen from 106.11 yen in US trade, while the euro slipped to $1.1203 against $1.1208.

The euro gained to 119.00 yen from 118.92 yen.

The pound edged up to $1.4136 from $1.4118 in New York but remains stuck around two-month lows.

Emerging currencies suffered as investors shunned riskier assets with the South Korean won, Indonesia’s rupiah, Thai baht, Taiwanese and Singapore dollars, and Philippine peso all slipping against the greenback.