US Dollar eases on uncertainty over BOJ, Fed policy

New (Sept 14)  The U.S. dollar eased from aneight-day high against the yen on Wednesday after skepticismgrew that the Bank of Japan would intensify its stimulativemonetary policies next week, while uncertainty about FederalReserve policy pressured the greenback against other currencies.

The dollar eased from a session high of 103.34 yen touchedin early trading and was last up just 0.05 percent against theJapanese currency at 102.58 yen .

Sources familiar with the BOJ's thinking said the centralbank would consider making negative interest rates thecenterpiece of future easing by shifting its prime policy targetto interest rates from base money. Doubts grew, however, that the BOJ would take a more dovishstance at its meeting on Sept. 20-21 or that it would be able tosignificantly weaken the yen if it did ramp up its accommodativemonetary policies.

"When you sit back and think about it, how much of an impactwill the BOJ actually have?" said Dean Popplewell, chiefcurrency strategist at Oanda in Toronto. "The market doesperceive to a certain extent that the BOJ is tapped."

The BOJ shocked markets in January by cutting rates belowzero for the first time in an attempt to weaken the yen, but theyen reaction was only temporary, and it has since gained morethan 15 percent against the dollar.

Analysts said uncertainty about the next development fromthe Fed prevented traders from making bullish bets on thegreenback. The halt in the dollar's gains came after thegreenback jumped against the euro and commodity currencies onTuesday.

Traders expect just a 15 percent chance that the Fed willhike rates next week, according to CME Group's FedWatch program.

"On the dollar side, I think it's more important what'sgoing on with the Fed," said Win Thin, global head of emergingmarket currency strategy at Brown Brothers Harriman in New York.

The Aussie hit a nearly seven-week low against thedollar on Tuesday of $0.7443, but last traded slightly higheragainst the greenback at $0.7471. The New Zealand dollar was last 0.5 percent higher against the dollar at$0.7291 after hitting a more than one-week low of $0.7235Tuesday.

The euro was last up 0.21 percent against the dollar at$1.1240 . The dollar index, which measures the greenbackagainst a basket of six major rivals, was last down 0.20 percentat 95.441.

Source: Reuters