Dollar eases in Asia before Fed policy meeting

TOKYO: The dollar gave up some of its recent gains in Asia on Tuesday as investor caution set in ahead of a US central bank policy meeting.

In midday Tokyo trade, the greenback weakened to 107.10 yen, after briefly falling below the 107-yen level. The unit bought 107.18 yen in New York on Monday.

The euro was nearly flat at $1.2944 against $1.2940 in US trade, while it fetched 138.66 yen from 138.69 yen.

In other trading, the pound fetched $1.6232 against $1.6234 in New York as investors await the results of Scotland's independence vote later this week.

The dollar rose past the 107 yen mark for the first time in nearly six years last week on speculation that the Federal Reserve will bring forward its timetable to raise interest rates.

But investor caution grew ahead of the central bank's policy meeting, which ends Wednesday.

"I don't get the impression that the (dollar-yen) pair will break widely" until the meeting ends, said Akira Moroga, manager of forex products at Aozora Bank.

The Fed -- which has said it would keep interest rates low for a "considerable time" after ending its massive stimulus -- is widely expected to further scale down the monetary easing programme after its meeting, setting the stage for a full termination at the end of October.

Market players are looking for any change in the Fed's statements, which could give a clue as to whether it would start raising its key rates before the mid-2015 forecast.

The dollar was also pressured by a surprise fall in US industrial production, which contracted in August after six months of gains, dragged down by a slump in automobile manufacturing.

Bank of Japan Governor Haruhiko Kuroda is delivering a speech to regional business leaders later Tuesday amid growing speculation that the central bank will expand its monetary easing to counter a downturn in the economy.