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Dollar steady ahead of US Federal Reserve meeting

US Dollar/AFP

US Dollar/AFP

SINGAPOUR, September 15- The US dollar was steady in Asia Monday on speculation that the Federal Reserve will bring forward its timetable to raise interest rates, analysts said, while fears over Scotland’s independence vote pressured the pound.

The dollar stood at 107.26 yen in afternoon Singapore trade, down slightly from 107.31 yen in New York late Friday but still at levels not seen since September 2008.

The euro was at $1.2958 from $1.2964, while slipping to 138.99 yen from 139.18 yen in New York.

Japanese markets were closed Monday for a public holiday.

Desmond Chua, market analyst at CMC Markets in Singapore, said the greenback remained well supported against other major currencies ahead of the highly anticipated September 16-17 meeting of the Federal Reserve’s key policy-making committee.

“With data going from strength to strength in the US… speculation is rife that the Fed may signal the timelines of a rate hike as soon as this week,” Chua said.

The Fed has projected a rate hike for the second half of 2015, but inflation hawks have been pressing for one in the early part of the year.

Inflation in the world’s biggest economy has remained weak, providing little impetus for the central bank to heed those calls.

“While we do not expect the Fed rate normalisation to take place or even to be announced this time, we will be looking for any material shift in the Fed language within its (policy) statement,” Singapore’s United Overseas Bank said in a note to investors.

The Fed is expected to further scale down its stimulus programme at the meeting this week, setting the stage for a full termination at the end of October.

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The pound stood at $1.6246 against $1.6264 in New York ahead of Thursday’s too-close-to-call independence referendum. Polls released at the end of last week suggested a razor-tight outcome.

“Following a steep sell-off since August, the British pound will come under scrutiny this week from a barrage of economic data which includes the Bank of England minutes, employment and inflation data,” Chua said.

“The Scottish referendum will also be at the forefront, with the potential surprise victory for the ‘Yes’ camp possibly causing a crumbling effect on the sterling after results are made known on September 19,” he added.

The dollar firmed against other Asian currencies.

It advanced to 1,038.18 South Korean won from 1,036.40 on Friday, to 30.0430 Taiwan dollars from 30.00, to 1.2663 Singapore dollars from 1.2639 and to 32.272 Thai baht from 32.17.

The greenback was also up to 44.00 Philippine pesos from 43.97, to 61.0675 Indian rupee from 60.86 and to 11,903 Indonesian rupiah from 11,815.

The Australian dollar bought 89.994 US cents, down from 90.55 US cents, while the Chinese yuan dropped to 17.4611 yen from 17.48 yen.

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