* Markets await Federal Reserve meeting on Tuesday
* Gold near all-time high as U.S. consumer morale sags
* Equity markets flat
(Reepats to more subscribers)
By Alex Richardson
SINGAPORE, Sept 20 (Reuters) - The dollar was on the
defensive and gold held near a record high on Monday as
possible further Federal Reserve moves to increase money supply
weighed on the U.S. currency and boosted alternative assets.
Uncertainty about the global economic recovery, fuelled by
weak U.S. consumer sentiment data on Friday, and a public
holiday in Japan also kept many investors sidelined, with oil
steady after a drop last week and Asian equities treading
water.
Japan intervened to sell yen for the first time in six
years last week, partially interrupting a decline in the dollar
that began when talk of further quantitative easing --
effectively printing money -- by the U.S. central bank revived
last month.
"If the Fed decides to give more hints it is about to
embark on more QE, the U.S. dollar slide will probably
continue," said John Kyriakopoulos, a currency analyst at
National Australia Bank in Sydney.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a preview of Tuesday's Fed meeting, see:
[]
For dollar/yen correlations http://link.reuters.com/wyn43p
For PDF on the yen's rise http://r.reuters.com/zuz33p
For graphic on intervention http://link.reuters.com/wym42p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The Fed is not expected to make any new monetary policy
moves on Tuesday, but the post-meeting statement will be
closely parsed for signals on the debate about whether further
large-scale asset purchases are needed to support the sluggish
recovery.
Views differ among Fed officials about whether stubbornly
high unemployment merits more aggressive policy intervention.
Recent data appear to indicate the U.S. economy is not
sliding back into recession as some market watchers had feared,
but investors are wrestling with how to value stocks as the
global recovery loses momentum and sales outlooks grow more
unclear.
MSCI's broadest index of Asian shares outside Japan was
flat <.MIAPJ0000PUS>, with equity markets gaining modestly in
Singapore <.FTSTI> and Taiwan <> but losing ground in Hong
Kong <>, South Korea <> and Australia <>.
BETS AGAINST DOLLAR
Market sentiment on the major currencies was summed up by
the latest Commodity Futures Trading Commission data. They
showed investors had increased bets against the U.S. dollar to
the highest level in a month, while sharply cutting back net
short positions in the euro and sterling.
On Monday, the dollar was parked at 85.70 yen <JPY=>,
having spent Friday in a tight 85.57 to 85.92 range as the risk
of further intervention by TOkyo kept investors away.
Gold <XAU=>, which tends to benefit from economic
uncertainty as it is viewed by many investors as a safe-haven
asset, traded around $1,279 an ounce, not far from the all-time
peak of $1,282.75 struck on Friday. []
U.S. crude oil futures <CLc1>, which slipped nearly 4
percent last week, gained 34 cents to $74 a barrel, with many
traders waiting for the Fed's readout on the U.S. economy.
[]
"If they lower their forecasts as some people are
expecting, oil prices would be pushed down because it implies
lower demand," said Michelle Kwek, an analyst at Informa Global
Markets in Singapore.
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