(Recasts, adds quote, changes dateline to LONDON from previous
* Dollar creeps up ahead of Fed decision
* Dollar below 6-week high vs yen
* Euro remains above $1.09
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, May 3 The dollar inched up against most
major currencies on Wednesday, as investors eyed a U.S. Federal
Reserve statement later in the day for guidance on whether bets
for a June interest rate hike are justified.
The Fed is widely expected to keep interest rates unchanged
at the end of its two-day policy meeting on Wednesday, but
investors will be looking to see whether the central bank
downplays the recent soft patch in the economy to leave the door
open for a move next month.
A June hike is currently 70 percent priced in, according to
Weak U.S. April auto sales data released on Tuesday added to
recent worries about the outlook for the U.S. economy, which
grew at its slowest rate in three years in the first quarter of
But with the trading close to its weakest levels since the
days after U.S. President Donald Trump's election in early
November, currency analysts said enough bad news had been priced
in, and that the risks to the greenback therefore were broadly
to the upside.
The dollar inched up 0.2 percent against its broad index
ahead of the meeting.
"If you look at how markets are positioned right now, it
feels like hoping for the best but psychologically braced for a
not so positive message," said UBS Wealth Management analyst
Geoffrey Yu. "The data of late probably hasn’t been enough to
justify any excess buoyancy or excess bullishnesss."
"(But) given the experience of March, when no one thought it
was a live meeting and then the Fed turned it into a live
meeting, I don’t think anyone would make that mistake again. All
we need is a late flurry of data in May and then the Fed, if it
sees a window, will hike in June."
Against the yen, the dollar was up just 0.1 percent to
112.12, close to a six-week high of 112.33 yen set on Tuesday
Market participants may be wary of actively buying the
dollar against the yen for now, said Satoshi Okagawa, senior
global markets analyst for Sumitomo Mitsui Banking Corporation
"Concerns about geopolitical risks such as North Korea had
weighed on the dollar against the yen recently... But the focus
is shifting to whether the (strength) of U.S. economic
fundamentals is for real," he said.
The greenback has risen against the yen over the past few
weeks as investor risk aversion diminished, helped in part by
reduced concerns over geopolitical tensions.
The euro edged down 0.1 percent to $1.0915, trading
within sight of a 5-1/2 month high of $1.0951 scaled last week
after the centrist Emmanuel Macron's victory against anti-euro
nationalist Marine Le Pen in the first round of France's
The runoff vote is on Sunday, with opinion polls showing
Macron holding a strong lead of 20 points over Le Pen.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Masayuki Kitano in Singapore; Editing
by Andrew Heavens)