Dollar eases in Asian trade as Fed meeting wraps up

AP FILE PHOTO

TOKYO—The dollar eased in Asian trade Wednesday as dealers awaited the results of a US Federal Reserve meeting later in the day while poor eurozone data also weighed on the currency.

In Tokyo deals, the greenback weakened to 97.36 yen against 97.45 yen in New York Tuesday afternoon, while the euro bought 128.17 yen from 128.31 yen.

The single currency was flat against the dollar at $1.3165.

Concerns about the strength of the US economy has raised questions about fresh policy moves by the Fed, while weak eurozone data boosted speculation about a rate cut from the European Central Bank, analysts said.

“Recent softness in the (US) economic data has raised speculation the Fed could be a little more dovish this time around, but we expect the Fed to maintain its commitment to $85 billion of asset purchases per month,” National Australia Bank said.

“In contrast, a rate cut tomorrow night by the ECB looks even more likely.”

Overnight in New York, the dollar weakened after the release of the Chicago area manufacturing sector purchasing manager’s index, which sank into contraction territory in April.

Barclays Capital currency analyst Yoshio Takahashi said the dollar may weaken further if other US data comes in weak, including a key manufacturing report due out later Wednesday and unemployment figures on Friday.

“The market at the moment is leaning towards a cheaper dollar, rather than a stronger yen,” he said in a client note.

Weighing on euro sentiment, fresh figures Tuesday showed European unemployment hit a new record of 12.1 percent in March, while international ratings agency Moody’s downgraded Slovenia by two notches to junk status, with a negative outlook, and warned that the eurozone member might need a bailout.