The dollar softened below ¥98 in Tokyo trading Wednesday on the back of stock price falls and ahead of the announcement of the U.S. Federal Reserve’s monetary policy decision and key U.S. economic data later in the day.
At 5 p.m., the dollar stood at ¥97.84-85, down from ¥98.13-15 at the same time Tuesday. The euro was at $1.3279-3282, slightly up from $1.3271-3273, and at ¥129.93-96, down from ¥130.23-27.
The dollar came under selling pressure from the outset in line with the Nikkei 225’s weak performance.
The greenback got a temporary lift thanks to purchases from Japanese importers for month-end settlements and buying related to the launches of investment trust funds.
But the U.S. currency failed to gain further momentum as a wait-and-see mood increased prior to the key U.S. economic events, traders said.
The Federal Open Market Committee, the policy-setting arm of the Fed, was set to release a statement to wrap up its two-day meeting. The U.S. central bank was believed to be examining the timing of starting to scale back its quantitative easing policy.
“The dollar-yen rate could drastically move, depending on the FOMC statement,” an official at a foreign securities firm said.
However, an official at a major foreign exchange margin trading service provider said the FOMC is likely to skip a policy revision this time because Fed Chairman Ben Bernanke was not scheduled to hold a news conference after the FOMC meeting.
Also Wednesday, preliminary data on U.S. gross domestic product for April-June and Automatic Data Processing Inc.’s private-sector jobs report for July will be released.