Dollar Up Slightly Against Yen Ahead of FOMC Outcome

 
   By Hiroyuki Kachi 
 

        The dollar was a tad higher against the yen in directionless Asia trade Wednesday, with many investors avoiding taking new positions ahead of the outcome from the closely-watched U.S. the Federal Open Market Committee meeting.
        Around 0450 GMT, the greenback was at Y123.47, compared with Y123.37 late Tuesday in New York.
        Investors hope the FOMC outcome, followed by a news conference by Fed Chairwoman Janet Yellen, will shape the market's view on the timing of when the Fed will start raising interest rates.
        "The situation remains agonizing" for the Fed policy setting members, said Ayako Sera, head of market research division at Sumitomo Mitsui Trust Bank, adding that too much of a hawkish tone from Fed officials would lead to a higher dollar across the board at the time when the eurozone is running afoul of Greek issues.
        "If they consider raising rates in September, they have to make the market well prepared," she said. The most likely scenario is a downward revision to the Fed's "dot chart," which reveals the members' expectations for interest rates in the longer term, suggesting there will only be a moderate pace of rate increases in future after raising rates once within the year.
        This may prompt investors to lock in profits after the recent rally and may push the greenback below Y122.46, its recent low set on Wednesday. But the downside will be limited as the Fed will likely leave open possibility of a rate increase this year, she said.
        Currency market participants shrugged off Japan's merchandise trade balance data for May. Japanese exports grew at the slowest pace in nine months in May as shipments to the U.S. and China moderated, while export volumes for the month fell compared with a year earlier.
        Amid worries about a possible default by Greece, the euro was at $1.1260 from $1.1248, while the common currency was at Y139.00 from Y138.77.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.03% at 86.26.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        June 17, 2015 01:15 ET (05:15 GMT)

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