Moderate dollar support on short covering ahead of Fed

FXstreet.com (London) - The dollar has seen some moderate support in the run-up to the conclusion of the Fed’s two-day FOMC meeting today. The dollar had been heavily sold in the run up to the meeting, where it is expected that the Fed will announce a continuation of its USD85bn-a-month asset purchase programme, shunning any talk of tapering. The gains come from trimming bearish dollar positions and profit taking ahead of a largely priced-in Fed non-move.

With weak labour market and consumer confidence data, the Fed is expected to take a solidly dovish tone. Non-farm payrolls added just 148,000 jobs last month and the US could be set for another consumer confidence sapping debt ceiling stand off when the temporary extension is reached on 7 February.

Expectations of continued Fed support have been risk-positive this morning. The Ftse is up 0.56 percent to 6,812.78 and US indices are expected to open strongly later today.

USD/JPY is up slightly to JPY98.1950,