Dollar faces selling pressure ahead of Fed meeting

Agence France Presse

Posted at Aug 09 2010 12:31 PM | Updated as of Aug 09 2010 08:31 PM

TOKYO - The dollar remained under pressure in Asia on Monday following weak US jobs figures, with the market cautiously awaiting a Federal Reserve policy meeting later this week, brokers said.

The dollar fetched 85.37 yen in Tokyo morning trade, down from 85.51 yen in New York late Friday.

The euro changed hands at $1.3287, against $1.3280 in New York, and 113.41 yen, down from 113.53 yen.

"Tokyo was taking over the dollar-selling momentum from New York late last week, when weak unemployment figures were released," said Tomohiro Nishida, a dealer at Chuo Mitsui Trust Bank.

Some 131,000 jobs were lost and the unemployment rate remained stuck at 9.5% last month, the US government said Friday, as federal and local governments slashed jobs.

The data added to the view that the Federal Reserve may be forced to do more to help the faltering US recovery along.

"Now all eyes are on the FOMC (Federal Open Market Committee) meeting," Nishida said. "Cautious trading is expected to continue until the FOMC meeting as no players want to take unnecessary risks for now."

With interest rates at virtually 0%, analysts have suggested the Federal Reserve rate-setting body's meeting Tuesday could consider other monetary policy-based stimulus.

That includes possible action by the central bank to directly pump money into the economy again, as it did at the height of the financial crisis.

The Bank of Japan will also hold a monetary policy-making meeting this week, but analysts expect the central bank will probably leave its super-low interest rate unchanged and announce no particular action to stimulate the economy.