Dollar steady as markets look to Fed for direction

The dollar edged lower against the yen on Wednesday and was steady against the other major currencies as investors awaited the outcome of the Federal Reserve’s policy meeting later in the day.

During European late morning trade, the dollar was weaker against the yen, with USD/JPY down 0.31% to 95.02.

Markets were anticipating the Fed’s rate statement and press conference, which it was hoped would clarify the bank’s stance on monetary policy, after Chairman Ben Bernanke said last month that the bank could begin to taper asset purchases if the economy continued to improve.

The dollar was steady close to four month lows against the euro, withEUR/USD dipping 0.02% to 1.3389.

Elsewhere, the pound fell to session lows against the dollar, withGBP/USD down 0.17% to 1.5615 after the minutes of the Bank of England’s June meeting showed that three policymakers voted in favor of additional easing, unchanged from the previous month.

The minutes showed that outgoing Governor Mervyn King and two other policymakers voted in favor of increasing the size of the asset purchase program by a further GBP25 billion, while six voted against.

The vote to keep the interest rate on hold at a record low 0.5% was unanimous.

The bank said recent economic data has been largely positive and was consistent with the slow but sustained recovery outlined in the bank’s quarterly forecasts last month.

The dollar edged higher against the Swiss franc, with USD/CHF inching up 0.06% to 0.9206. 

The greenback was lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD climbing 0.14% to 0.9497,NZD/USD gaining 0.21% to trade at 0.8005 and USD/CAD inching up 0.02% to 1.0211.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged down 0.02% to 80.80.