Dollar eases on uncertainty over BOJ, Fed policy
Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013. REUTERS/Shohei Miyano/Illustration/File Photo
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By Sam Forgione
NEW YORK (Reuters) - The U.S. dollar eased from an eight-day high against the yen on Wednesday after skepticism grew that the Bank of Japan would intensify its stimulative monetary policies next week, while uncertainty about Federal Reserve policy pressured the greenback against other currencies.
The dollar eased from a session high of 103.34 yen touched in early trading and was last down 0.18 percent against the Japanese currency at 102.35 yen
Sources familiar with the BOJ's thinking said the central bank would consider making negative interest rates the centerpiece of future easing by shifting its prime policy target to interest rates from base money.
Doubts grew, however, that the BOJ would take a more dovish stance at its meeting on Sept. 20-21 or that it would be able to significantly weaken the yen if it did ramp up its accommodative monetary policies.
"Whatever the BOJ does doesn’t necessarily weaken the yen," said David Gilmore, partner at FX Analytics in Essex, Connecticut.
The BOJ shocked markets in January by cutting rates below zero for the first time in an attempt to weaken the yen, but the yen reaction was only temporary, and it has since gained more than 15 percent against the dollar.
Analysts said uncertainty about the next development from the Fed prevented traders from making bullish bets on the greenback. The halt in the dollar's gains came after the greenback jumped against the euro and commodity currencies on Tuesday.
Traders expect just a 15 percent chance that the Fed will hike rates next week, according to CME Group's FedWatch program.
"On the dollar side, I think it’s more important what’s going on with the Fed," said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman in New York.
Analysts also said U.S. August retail sales data, scheduled to be released Thursday, would be watched for possible implications on Fed policy.
The euro was last up 0.26 percent against the dollar at $1.1246
(Reporting by Sam Forgione; Editing by Chizu Nomiyama)
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