But the won still stayed higher on the day, and the North Korean launch had limited impact on Asian currencies, which have been supported recently by inflows into regional debt and equities markets. "Markets are also anticipating the Fed meeting later today, in which a lot of people are expecting the Fed to roll its Operation Twist purchases into open-ended purchases," said Nick Verdi, FX strategist, Asia-Pacific ex-Japan for Barclays in Singapore.
Analysts expect the Fed to replace the Treasury purchases under Twist, which were funded by sales and redemptions of short-term debt, with a fresh $45 billion per month in outright buying of Treasuries, and for the Fed to keep buying a total $85 billion in assets per month. The baht held steady versus the dollar, having come off the previous day's high of 30.601, the baht's highest level since October 17.
A breach of the 30.600 level, the top end of the baht's range over the past two months, could open the way for the baht to rise to about 30.50 or so, said a trader for a Japanese bank in Bangkok. Over the past couple of months, the baht's upside has been blocked by some thick dollar bids, the trader said. In addition to dollar demand from oil firms, such demand for dollars probably stems from the fact that Thailand's trade balance has recently been in deficit, the trader said.
"But dollar-selling pressure has started to spread and has been chipping away at the thick dollar buying orders," he said. The peso retreated versus the dollar, with a trader for a European bank citing corporate dollar buying. The peso briefly hit a two-week low of 41.020 to the dollar, testing trendline support for the peso, and resistance for the greenback, that comes in roughly near that level.
The trendline, drawn through the peso's lows hit in late May, late August and mid-November, is part of a so-called "falling wedge" pattern on technical charts that has been taking shape since around May or so. Such a chart formation points to the possibility of a reversal in trend and could become a bullish signal for the dollar, which has slid roughly 6.5 percent against the peso. "For dollar bulls to succeed, it has to break and hold that resistance line," said the trader for a European bank, adding that a successful break might open the way for the peso to drop towards 41.40.