HONG KONG (Thomson Financial) - The US dollar was steady against the yen and the euro in afternoon trade in Asia on Tuesday as investors were sidelined by the Bank of Japan meeting and the release of economic data in the US and Europe.
"With the Group of Seven meeting a non-event for the currency market, investors are waiting for the Bank of Japan meeting, the release of GDP data in Japan and the retail sales figures in the US," said Tomoko Fujii, head of economic strategy at Bank of America.
The Bank of Japan will start a two-day meeting on Thursday to discuss monetary policy and at the same time the government will release its preliminary fourth-quarter gross domestic data, said Fujii.
The US will announce last month's retail sales figures on Wednesday.
At 1.00 pm (0500 GMT), the dollar was trading at 106.87 yen from 106.86 in Sydney this morning. The euro was quoted at 1.4522 dollars from 1.4518.
There were no important data releases today so investors preferred not to take an aggressive position on major currencies, said Fujii.
Also later this week, Federal Reserve Chairman Ben Bernanke, who earlier signalled a further easing in interest rates, will be addressing the US Senate.
While the Bank of Japan is widely expected to keep its benchmark rate unchanged at 0.5 percent, the lowest among developed countries, investors will be waiting for the statement from its governor for any clue on the direction of interest rates, said Fujii.
On the other hand, the European Central Bank will likely lower its interest rates in the second quarter of this year by a total of 50 basis points, she said.
With the expected rate cuts by both the Fed and the ECB, the euro will likely stay stable against the dollar towards the end of the quarter, Fujii said.
Investors will be watching for further economic reports to be released in Europe this week for more clues on future interest rate moves.
The ZEW investment survey, which measures German investor confidence, is expected by at least one analyst to reflect continued pessimism about the German economic outlook when it is released later today. Germany is the euro zone's largest economy.
Britain's consumer price index is also due out later today while the country's quarterly inflation report will be released Wednesday. The reports will offer some insight as to whether the Bank of England will continue to lower its benchmark interest rate.
Elsewhere, the Australian dollar was little changed at 90.37 US cents even after the Reserve Bank of Australia (RBA) yesterday warned further interest rate hikes were likely to curb inflation.
"Market participants have become more hawkish on the outlook for RBA policy and current market pricing is consistent with another 25 basis points hike to 7.25 percent in March," said John Kyriakopoulos, head of currency strategy at NAB Capital.
Hong Kong 1.00 pm (0500 GMT)
US dollar
106.87 yen
1.1012 sfr
Euro
1.4522 usd
155.13 yen
1.5984 sfr
0.7437 stg
Sterling
1.9508 usd
208.54 yen
2.1488 sfr
Australian dollar
0.9037 usd
0.4631 stg
96.60 yen
New Zealand dollar
0.7897 usd
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