Market Review - 28/01/2014 21:33GMT

Dollar trades mixed against other major currencies ahead of Fed's meeting

The greenback traded mixed versus other major rivals on Tuesday as investors turned their attention to the outcome of the Federal Reserve's two-day policy meeting on Wednesday. Market participants are expecting that Fed will cut its asset purchase program by another $10 billion, to $75 billion per month after December last year.

During the day, although the single currency retreated after meeting renewed selling interest at 1.3688 ahead of European open and then tanked to 1.3629 in tandem with cable in European morning, price rebounded strongly to 1.3686 in New York morning on dollar's broad-based selloff after disappointing U.S. durable goods orders reports. Later, euro stabilized around 1.3660 later and traded in a relatively narrow range for rest of the New York session.

U.S. the Commerce Department said on Tuesday that durable goods orders tumbled 4.3% last month, confounding expectations for a 1.8% gain. Orders for durable goods in November were revised to a 2.6% increase from a previously reported gain of 3.4%.

U.S. dollar rose against the Japanese yen after finding support at 102.49 in Australia on Tuesday and penetrated Monday's high of 102.93 to 103.25 in early European trading in part due to cross-selling in yen, however, broad-based weakness in greenback during the New York morning pressured price back to 102.63 before rebounding on short-covering.

Cable fluctuated widely on Tuesday. Despite extending gain from Monday's low at 1.6471 to an intra-day high of 1.6627 ahead of European open, price fell to 1.6536 in European morning after preliminary data showed that the U.K. economy grew in line with expectations in the fourth quarter but added to uncertainty over the Bank of England's forward guidance. Later, price climbed back to 1.6578 and then higher to 1.6615 in New York morning before easing.

Report from U.K showed that the economy grew 0.7% in the final three months of 2013, slightly down from growth of 0.8% in the previous quarter, and expanded 2.8% from a year earlier.

On the data front, the Conference Board said its index of U.S. consumer confidence improved to 80.7 this month from a downwardly revised 77.5 in December. Market had expected the index to rise to 78.9.

Data to be released on Wednesday:

Australia Westpac leading economic index, U.K. nationwide house prices, Germany consumer confidence, Swiss UBS consumption indicator and U.S. FOMC rate decision.