TOKYO: The dollar bounced back against the yen in Asia Thursday on relief the US Federal Reserve decided to keep its stimulus programme in place for now, while Chinese manufacturing activity showed a rare uptick.
The greenback firmed to 98.26 yen in Tokyo midday trade from 97.92 yen in New York late Wednesday, while the euro bought $1.3281 and 130.48 yen, compared with $1.3301 and 130.24 yen.
Comments from the US Federal Reserve that the economy was growing modestly weighed on the greenback in US trade as it indicated the bank was likely to keep its huge stimulus in place for some time.
Global markets have been keeping a close eye on the Fed as it contemplates winding down the $85 billion a month bond-buying programme, which has kept demand for the dollar weak.
Analysts had been talking about the bank's September 17-18 policy meeting for it to announce the beginning of tapering.
National Australia Bank (NAB) said "the Fed is hardly sounding bullish about near-term economic prospects".
"The fact that it will 'closely monitor incoming information on economic and financial developments in coming months' suggests that September 18 is by no means set in stone," it said in a note.
But the dollar rebounded in Tokyo as the improved economic outlook gave investors confidence to pick up higher yielding assets, while China's official purchasing managers index (PMI) showed a surprise rise in July.
The index hit 50.3 last month from 50.1 in June, according to the National Bureau of Statistics. That compares with a median forecast of 49.8 in a survey of 11 economists by Dow Jones Newswires.
A reading below 50 indicates contraction, while anything above signals expansion.
"From Japanese to foreigners, what I see on my trading screen are dollar-buying orders only," a dealer at a major Tokyo bank told Dow Jones Newswires.
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