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Dollar hovers, awaiting Fed news

JIJI

The dollar traded around ¥95 in Tokyo trading late Tuesday as traders were awaiting a policy-setting meeting of the U.S. Federal Reserve to begin later in the day for a two-day run.

At 5 p.m., the dollar was quoted at ¥95.06-08, against ¥94.99-95.00 at the same time Monday. The euro was at $1.3374-3376, against $1.3346-3348, and at ¥127.14-17, against ¥126.78-83.

The dollar was firmer versus the yen in Tokyo after it slid as low as around ¥94.30 in late New York trading overnight on a Financial Times article that Fed Chairman Ben Bernanke was likely to signal that the U.S. central bank is close to tapering down its asset purchases.

The greenback was backed by purchases by Japanese importers as well as solid U.S. economic data released Monday, traders said.

In the afternoon, the dollar’s upside was capped by the lack of upward momentum in Tokyo stock prices, traders said. But after European players joined trading in late hours, the dollar gained ground in line with the euro’s rise.

Market players were focusing on a news conference by Bernanke on Wednesday following the end of the Federal Open Market Committee meeting, after he said in a congressional hearing late last month that the Fed could slow down asset purchases over the next few FOMC meetings.

“Basically, the market consensus is that Bernanke will give dovish remarks on a cut in quantitative easing” to avoid causing market turbulence, an official at a bank-affiliated securities firm said.

A cutback in asset purchases by the Fed will come “after the beginning of this autumn at the earliest,” an official at a foreign brokerage firm said.