TOKYO - The dollar was little changed in Asian trade Wednesday as traders looked ahead to European interest rate decisions after the Federal Reserve left US borrowing costs on hold, dealers said.
The dollar was stable at 108.31 yen in Tokyo morning trade against 108.36 late Tuesday in New York. The euro gained to 1.5470 dollars from 1.5454 but slipped to 167.33 yen from 167.46.
Traders were turning their attention to monetary policy meetings on Thursday at the European Central Bank (ECB) and the Bank of England.
Markets expect the ECB to keep its interest rates unchanged at 4.25 percent amid mounting concerns about the health of the eurozone economies.
"Investors are waiting to see whether the ECB will recognise the downside risks to growth and current (soft) economic conditions in the eurozone or continue to focus on inflation," said Resona Bank analyst Shigeru Nakane.
If the ECB softens its anti-inflation rhetoric or highlights risks to economic growth, that could signal the central bank is set to hold off hiking rates in the near term to avoid snuffing out economic growth, he said.
The Bank of England is also expected to stand pat this week, although analysts see a small chance of a rate hike to try to contain inflation.
On Tuesday the Fed kept its key rate at 2.0 percent and noted continued risks to growth.
"We continue to think the Fed is in no hurry to act and will be paying close attention to developments in the economy and financial markets," NAB Capital analyst Robert Henderson wrote in a research note.
"We suspect (US) rates will remain on hold well into 2009 and then increase only moderately." - AFP
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