Dollar May Fall on Prospects Fed to Repeat Pledge for Low Rates

Nov. 4 (Bloomberg) -- The dollar may fall versus the euro on speculation the Federal Reserve will today repeat its pledge to keep the benchmark interest rate near zero for an “extended period.”

Demand for the dollar may also decline as gold surged to a record high after India’s central bank bought 200 metric tons of the metal from the International Monetary Fund. The euro was poised to advance versus the pound before a report forecast to show German factory orders advanced in September for a seventh month, adding to signs the recession is easing in the 16-nation region that uses the single currency.

“There may be a risk of dollar selling purely based on the view that I don’t think there will be a change in sentiment,” said Phil Burke, chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. “Gold has made a very good move higher again. It has weighed on the U.S. dollar. That may be the theme for Asia today.”

The dollar traded at $1.4728 per euro at 8:36 a.m. in Tokyo from $1.4724 in New York yesterday. The greenback was little changed at 90.41 yen. The euro was at 133.17 yen from 133.01 yen. The euro was at 89.64 British pence from 89.59 pence.

Gold futures for December delivery rose to a record $1,088.50 an ounce yesterday in after-hours trading on the New York Mercantile Exchange’s Comex unit.

The Fed will release its monetary policy statement today at the end of a two-day meeting. Policy makers will hold the benchmark interest rate target in a range between zero and 0.25 percent, according to the median estimate of economists in a Bloomberg News survey.

The euro may advance as the Economy Ministry in Berlin is expected to report German factory orders rose 1 percent in September after gaining 1.4 percent in August, according to another Bloomberg survey. The data is due on Nov. 6.