Yen higher, dollar mixed as Fed meets

[NEW YORK] The Japanese yen gained strength while the dollar edged up against the euro Tuesday as the Federal Reserve began a two-day meeting expected to again postpone a long-awaited rate hike.

The Fed meeting opened amid more signs of slower US economic activity that would further justify a delay to increasing the federal funds rate: consumer confidence sagged and durable goods orders fell for a second straight month in September.

"The data offered more evidence of the US economy's weaker footing of late, cementing expectations of no action on rates on Wednesday," said Joe Manimbo of Western Union Business Solutions.

The dollar pushed up to US$1.1041 per euro from US$1.1059 late Monday.

The market's attention will be on how the Fed views US economic prospects for the months to come, with most bets that a rate rise will not come before March.

"Should the Fed play down the economy's soft patch and keep its options open on rates this year, downside for the dollar should prove mild," said Mr Manimbo.

The yen picked up against both the greenback and euro, even though the Bank of Japan is under pressure to ramp up its stimulus programme in its own policy meeting on Friday.

At 2100 GMT the dollar bought 120.48 yen and the euro, 133.02 yen.

"Markets remain cautious toward risk-taking," Yuji Saito, executive director of foreign exchange at Credit Agricole SA, told Bloomberg News.

"Investors are taking to the sidelines before the Fed and BoJ meeting."

AFP