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Dollar holds before FOMC minutes

JIJI

The dollar was directionless around ¥97.50 in Tokyo trading Wednesday, with traders keenly awaiting minutes of the July meeting of the U.S. Federal Reserve’s policy-setting committee.

At 5 p.m., the dollar stood at ¥97.57-59, up from ¥97.06-08 at the same time Tuesday. The euro was at $1.3392-3393, up from $1.3341-3345, and at ¥130.67-69, up from ¥129.50-53.

The greenback fell as low as around ¥97.10 in the morning, dragged down by Japanese stocks’ initial losses, but bounced back to levels around ¥97.50 in the afternoon in line with the stock market’s rally.

With the Fed set to release the Federal Open Market Committee meeting’s minutes later Wednesday, “the dollar-yen rate lacked a clear direction, generally moving in sync with stock price fluctuations,” an official at a foreign exchange brokerage said.

Traders are paying close attention to the FOMC minutes, as financial markets around the globe are leery of an early start of the U.S. central bank’s tapering of its quantitative easing program.

Amid speculation about the Fed tapering, the benchmark 10-year U.S. Treasury yield was staying around a two-year high above 2.8 percent earlier this week, and the Dow Jones industrial average fell for five market days in a row through Tuesday.

Although a widening gap between Japanese and U.S. interest rates usually encourages dollar purchases against the yen, “it’s hard to buy the dollar now due to U.S. stocks’ weakness,” said an official at a foreign exchange margin trading service provider.

In addition to the tapering fears, market participants are uneasy about who will succeed Ben Bernanke as Fed chairman.