* Dollar/yen eases, on track for 0.7 pct weekly loss
* Weak US data further reduce US rate hike prospects
* Bounce in commodities after rough patch supports Aussie
* Focus on BOJ and Fed policy meetings on Sept 20-21
(Updates prices, adds comments)
By Masayuki Kitano and Shinichi Saoshiro
SINGAPORE/TOKYO, Sept 16 The dollar eased versus
the yen on Friday, struggling to gain traction after lacklustre
U.S. economic data further dampened already low expectations for
a Federal Reserve interest rate hike next week.
Movements in major currencies were confined to relatively
narrow ranges with a wait-and-see mood prevailing ahead of the
Sept. 20-21 Fed and Bank of Japan policy meetings.
The dollar eased 0.1 percent to 102.02 yen. The
greenback is down 0.7 percent for the week, with the yen finding
favour as risk sentiment soured on worries that central banks
are running out of ammunition to bolster economic growth.
Data issued on Thursday showed U.S. retail sales fell more
than expected in August amid weak purchases of automobiles and a
range of other goods.
Financial markets are pricing in a roughly 12 percent
probability of a Fed rate hike next week, down from 15 percent
before the data, according to the CME FedWatch tool.
"While the dollar/yen will keep an eye on Japanese
government bond yields and equities, it is likely to be range
bound around 102 yen before the BOJ policy meeting," said
Masafumi Yamamoto, chief forex strategist at Mizuho Securities
"But there is the risk of the market reacting to speculative
reports on the Fed and BOJ during the media blackout period
before the policy meetings."
At its meeting next week, the BOJ is due to conduct a
comprehensive review of its current policy framework that
combines negative interest rates with a massive asset-buying
Many market players expect the BOJ to indicate a preference
for a steeper yield curve to cushion the blow on banks from
negative interest rates. There is also focus on whether the
central bank will cut interest rates deeper into negative.
There still seem to be some expectations that the BOJ could
cut interest rates deeper into negative territory, said Sim Moh
Siong, FX strategist for Bank of Singapore, adding that the yen
is likely to rise if the BOJ were to stand pat.
"I think the market has somewhat priced in a (rate) cut as
well as a tweak to the QE programme," Sim said.
"If the BOJ stays put next week then I would expect the yen
to come under some appreciation pressure, especially if the Fed
stays put as well," he added.
The euro was little changed at $1.1240.
Elsewhere, the Australian dollar inched up 0.1 percent to
$0.7520 after posting a 0.7 percent gain on Thursday.
The Aussie, sensitive to shifts in broader risk sentiment,
hit a seven-week low of $0.7443 earlier this week. But the
commodity-linked currency has pulled up from that trough thanks
to sizeable gains in prices of commodities such as copper and
crude oil following a rough patch earlier this week.
(Reporting by Shinichi Saoshiro; Additional reporting by
Masayuki Kitano; Editing by Simon Cameron-Moore)