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Greenback drops against yen ahead of Fed meeting

Greenback drops against yen ahead of Fed meeting

The U.S. dollar was easier against the yen in listless Asian trade yesterday as players waited nervously for a lead from the U.S. Federal Reserve on the outlook for interest rates, dealers said.
While no change is expected in the Fed's key interest rate, the focus will be on a U.S. central bank's outlook statement yesterday and any changes to its forecasts for growth and inflation, they said.
Additionally, the Bank of England and the European Central Bank also meet later this week, with a British rate hike seen as a distinct possibility in view of rising inflation pressure.
The U.S. dollar slipped to 119.80 yen in Tokyo afternoon trade from 120.00 in New York late Tuesday. The euro was at US$1.3540 after US$1.3542 and at 162.17 yen from 162.54.
Although the Fed is expected to leave its key lending rate on hold at 5.25 percent, players are looking for a lead on the chances of a future interest rate cut, with market views divided.
CMC Markets chief analyst Ashraf Laidi said his firm still anticipates the Fed meeting to be negative for the U.S. dollar due to a possible easing in its hawkish outlook.
Market participants were also focused on interest rate decisions today at the Bank of England and the European Central Bank.
"Players are refraining from trading because they are waiting to see the outcome of these events," said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.
He said investors were focused on the Bank of England's monetary decision where rates are expected to rise a quarter percentage point to 5.5 percent, although a half point hike cannot be entirely ruled out.