The dollar traded near a seven-week high versus the yen on Wednesday as oil mark...
TOKYO - The dollar traded near a seven-week high versus the yen on Wednesday as oil markets slowly recovered from a supply shock, but markets were cautious ahead of a U.S. Federal Reserve meeting later in the day that is expected to deliver another interest rate cut.
With investors largely pricing in a quarter-point rate cut by the Fed, the focus will be on how much more easing it signals for this year and next.“Speculators are already excessively short the dollar,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo. Oil prices edged lower in Asia, extending a 6% tumble on Tuesday after Saudi Arabia’s energy minister said the kingdom has tapped inventories to restore oil supplies to where they stood before drone attacks over the weekend shut around 5% of global oil output.Overnight borrowing costs in the $2.2 trillion repurchase agreement market spiked to 10% on Tuesday as lending dwindled due to huge corporate tax payments and the settlement of $78 billion of Treasuries sold last week.
Some traders say are monitoring cross-currency basis swaps JPYCBS3Y=, which are starting to widen in a sign of higher costs for dollars.
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