Euro up against dollar and yen before Fed

The euro climbed versus the dollar and yen yesterday as the Federal Reserve kicked off a two-day meeting, but low expectations about what the European Central Bank may decide to do later this week kept investors cautious of aggressively buying the currency.

The ECB is due to meet on Thursday, just a day after the Federal Reserve finishes its policy meeting. Some are worried that the central bank might not deliver sufficient stimulus to assuage concerns over a global economic slowdown.

There has been an increase in expectations that the ECB will buy more bonds since its president, Mario Draghi, said that the bank will carry out whatever action is necessary to save the single currency last week, causing the euro to climb against the greenback in four of the previous five sessions.

However, sentiment has turned a little more cautious this week with the policy decisions about to be made. Faros Trading managing director Brad Bechtel said that the euro moved a little too fast on ECB and Fed expectations and that both meetings will probably disappoint.

The common currency rose to $1.2329, but remained below a three-week peak of $1.2389 from last week. Against the yen, it moved up by 0.3 per cent to 96.06 yen.