* Sterling pulls away from 2-week lows as BoE awaited
* Yen off overnight low as hopes fade for drastic BOJ easing
* BOJ, Fed will both hold policy meetings on Sep 20-21
TOKYO, Sept 15 The yen firmed in Asian trade on
Thursday as investors' looked for safe havens in the face of
weakening share markets, though major currency pairs were
otherwise little changed ahead of next week's Bank of Japan and
Federal Reserve policy meetings.
Concerns about the policy effectiveness of the world's major
central banks have triggered a steepening trend in bond yields
in recent sessions. A downturn in risk sentiment has bolstered
the Japanese currency due to its perceived safe-haven status.
The dollar edged down 0.2 percent to 102.24 yen,
moving away from a one-week high of 103.35 yen touched
"It's interesting that we're seeing a little bit of risk
aversion creep in," said Mitul Kotecha, head of FX strategy at
Asia-Pacific for Barclays in Singapore.
"That itself is having some impact on markets, and we're
seeing the yen firm up on the back of that," he said. "If
there's a theme ahead of next week's events, it is that risk
theme," he said.
The yen moved off its overnight lows on fading expectations
of drastic easing steps from the BOJ. Sources familiar with the
BOJ's thinking said the central bank will consider making
negative interest rates the focus of its future easing by
shifting its prime policy target to interest rates from base
There is no consensus in the BOJ yet on whether to deepen
negative rates at the Sept. 20-21 meeting, when it conducts the
comprehensive assessment of its policies, the sources said.
"I was a bit surprised yesterday. I thought the yen might
have been a little stronger, due to the risk-off mood," said
Masashi Murata, currency strategist for Brown Brothers Harriman
"But maybe the BOJ news had an effect. It's hard to say what
will happen next week," he said.
The Fed will also meet on Sept. 20-21, and contrasting
comments from U.S. policymakers have led to uncertainty about
the monetary outlook.
While U.S. interest rate futures indicate expectations for
an actual rate increase next week remain low, the dollar could
get a lift from anything in the Fed's statement that hints at a
hike this year.
The euro edged down slightly to $1.1244, and also
slipped 0.2 percent against its Japanese counterpart to 114.98
The dollar index, which tracks the U.S. unit against a basket
of six major rivals, was nearly flat at 95.326, after
wobbling in a narrow range this week between a low of 94.935 on
Monday and a high of 95.672 on Tuesday.
Sterling added 0.2 percent to $1.3258, moving away
from a two-week low of $1.3139 hit overnight, as investors
awaited a Bank of England policy meeting later on Thursday.
The BoE is not expected to introduce new measures, having
last month cut interest rates to record lows and reintroduced an
"Chances are pretty slim that the Bank of England will
double down on last month's stimulus following generally robust
UK economic data between the meetings," Jasper Lawler, market
analyst at CMC Markets, said in a note.
(Reporting by Lisa Twaronite; Editing by Simon Cameron-Moore)