(Recasts, adds quote, changes dateline to LONDON from previous SINGAPORE)
* 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 (Reuters) - 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 CME FedWatch.
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 the year.
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 in Singapore.
“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 presidential elections.
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)