Dollar holds firm ahead of Fed meeting outcome

The dollar held firm in Asia Wednesday as investors kept to the sidelines ahead of the Fed concluding its policy meeting with all eyes on comments from officials about the future of its stimulus drive.

The greenback changed hands at 98.03 yen in Tokyo morning trade, little changed from 98.02 yen in New York Tuesday afternoon.

The euro fetched $1.3261 and 130.01 yen compared with $1.3264 and 130.02 yen.

The dollar was likely to trade in a tight range ahead of closely watched US events, including second-quarter growth data and the Federal Reserve's policy decision as well as jobs figures on Friday, said a senior dealer at a major European bank in Tokyo.

The Fed is to wrap up the two-day meeting of its policy-making Federal Open Market Committee (FOMC) on Wednesday.

The bank's post-meeting statement will be parsed for clues on when, and how quickly, the Fed plans to taper its $85 billion-a-month asset-purchase programme. A pull-back on the drive would mean fewer dollars sloshing around in the financial system, driving up demand and the currency's value.

Even if US data is not great, "I doubt the FOMC will change the language," which is likely to push the dollar higher, the dealer told Dow Jones Newswires.

Fed chairman Ben Bernanke has suggested the central bank could begin cutting back on its quantitative easing programme later this year and possibly end it by the middle of next year if the world's economy continues to improve.

In later comments, particularly during two days of twice-yearly testimony to Congress this month, Bernanke sought to assure markets that near-zero interest rates would stay put for a while, given "weak" economic conditions.

The Fed has said any rate hikes still hinged on reducing the unemployment rate to 6.5 percent or less, and keeping inflation tame at around 2.0 percent.