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Dollar Range-Bound Above 117.50 Yen in Tokyo Morning Before FOMC

Posted on: Tuesday, 31 January 2006, 18:00 CST

Tokyo, Jan. 31 (Jiji Press)--The dollar moved narrowly above 117.50 yen in Tokyo Tuesday morning, reflecting a cautious mood before a U.S. Federal Open Market Committee meeting later in the day.

At noon, the greenback stood at 117.55-58 yen, compared with 117.37-40 yen at 5 p.m. Monday, after moving between 117.49 yen and 117.79 yen.

The euro was quoted at 1.2096-2099 dollars, down from 1.2108- 2111 dollars late Monday.

After rising as high as 117.81 yen in Monday's overseas trading, the dollar continued to move on a firm note above 117.50 yen in early Tokyo trading.

But the U.S. unit became top-heavy as it approached 118 yen, a line yet to be touched this year, as traders were reluctant to take aggressive positions before the FOMC meeting, market sources said.

Having factored in a 0.25-percentage-point rate hike decision, currency players are focusing their attention on the Federal Reserve's statement to be issued after the meeting, hoping to find clues to whether the Fed will continue raising interest rates in the subsequent meeting in March.

"The upcoming statement is very important in analyzing the Fed's future policy as it is to be released at a time when U.S. economic reports are showing mixed results," an official at Mizuho Bank said.

Many market players now expect the statement will only emphasize the Fed's policy based on economic data, without referring to the fate of its rate hike campaign. Thus, it is uncertain how the currency market will move after the FOMC, an official at a Japanese trust bank said.END

Source: Jiji Press English News Service

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