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TOKYO – The dollar slumped to its lowest level in a month against the yen in Asia on Monday as investors await a US central bank policy meeting for clues about the future of its stimulus program.
The greenback fetched 97.76 yen in Tokyo morning trade — its lowest since late June — against 98.20 yen in New York on Friday afternoon.
The euro bought $1.3286 and 130.09 yen against $1.3278 and 130.48 yen.
Eyes are on the two-day Federal Reserve meeting, with speculation growing that it may hold off winding down the $85-billion-a-month bond-buying scheme following a mixed bag of economic data.
Fed officials have said they would likely start reeling in the programme when the economy shows it can stand on its own.
Investors are also waiting for the latest non-farm payrolls data and GDP data for the second quarter.
“Expectations of a dovish Fed are weighing on the (dollar),” Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires.
Comments from Fed officials, including its chief Ben Bernanke, have kept investors guessing about a timeline for any pull-back.
A draw-down on Fed stimulus would mean fewer dollars sloshing around in the financial system, lifting demand and in turn sending the currency higher.
“The outlook for (the dollar)… will be dominated by the ongoing conflict between US economic data and Fed policy rhetoric,” Credit Agricole said in a note.
The European Central Bank will hold a policy meeting Thursday but analysts say improving figures for the eurozone mean policymakers will likely to hold off cutting interest rates for the time being.