Dollar dips ahead of Fed policy announcement

The dollar slipped against the yen in Asian afternoon trading on Wednesday with investors sticking to the sidelines as they await the conclusion of the US Federal Reserve's policy meeting.

The US unit was at 95.10 yen in Tokyo, against 95.37 yen in New York late Tuesday.

The dollar-yen rate was likely to trade in a narrow range before the Fed wraps up its two-day meeting later in the day with chairman Bernanke speaking to reporters soon after, said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

All eyes are on whether the US central bank gives any indication of when it will begin to reel in its $85-billion-a-month bond buying programme known as quantitative easing.

The Fed needs to "grasp the nettle to map out a path toward tapering" the programme, National Australia Bank said.

Currency rates hardly moved after Japan released data showing its trade deficit for May expanded a smaller-than-expected 9.5 percent from a year earlier to $10.4 billion. The figures showed exports jumped 10.1 percent from a year earlier, offering up some good news for Japan's economy.

The euro fetched $1.3398 compared with $1.3396 while it changed hands at 127.42 yen against 127.76 yen.

Euro trade won a measure of support from the ZEW economic institute which said German investor sentiment rose slightly in June on firming hopes for a gradual recovery in Europe's biggest economy.

The dollar was mixed against other Asia-Pacific currencies on Wednesday.

It firmed to 10,050 Indonesian rupiah from 9,944 rupiah on Tuesday, to 30.85 Thai baht from 30.75 baht, and to 58.70 Indian rupees from 58.41 rupees.

The greenback eased to Sg$1.2593 from Sg$1.2601, to 1,130.59 South Korean won from 1,130.75 won, and to 43.15 Philippine pesos from 43.25 pesos. It was flat at Tw$29.90.

The Australian dollar slipped to 94.93 US cents from 95.18 cents while the Chinese yuan fetched 15.53 yen from 15.45 yen.