FOREX-Dollar broadly steady as markets seek Fed policy clarity
* Market awaits signals on Fed's next policy step * Fed expected to keep options open on pace of QE * Dollar index steady, holds above 4-month low By Anooja Debnath LONDON, June 19 (Reuters) - The dollar was broadly steady in subdued trading on Wednesday as markets awaited the outcome of the Federal Reserve's rate-setting meeting for clues on the future course of U.S. monetary policy. Speculation that the central bank will start tapering its asset-buying stimulus before the end of the year triggered a recent sell-off in global stocks and also market volatility which caused the dollar to lose ground to currencies like the safe-haven Japanese yen. Analysts said the dollar and riskier assets could benefit if Fed Chairman Ben Bernanke manages to pacify nervous markets. Fed policymakers will likely announce that they will continue to buy bonds at a monthly pace of $85 billion, while keeping their options open to scale back the programme later this year if the U.S. labour market improves. The Fed's policy statement is due at 1800 GMT with Bernanke's news conference half an hour later. "Markets are cautious ahead of Bernanke ... a lot of the focus will be on the tapering discussion," said Paul Robson, currency strategist at RBS. Analysts said Bernanke could try to emphasise that tapering is not tightening and an actual rise in the funds rate is still a distant prospect. "It is very much a balancing act for Bernanke. He would want to try and start weaning the markets off free and easy money... but equally it is about rate expectations for late 2014," said Robson. Against a basket of currencies, the dollar was flat at 80.60 , holding above a four-month low of 80.500 touched on Thursday. The dollar was down 0.4 percent at 94.89 yen, staying above the 93.75 yen hit last Thursday, which was its lowest since April 4. Resistance was cited at 96.11 yen, which is the 23.6 percent Fibonacci retracement of the dollar's fall to 93.75 yen on June 13 from 103.74 yen on May 22. The dollar held steady against the euro at $1.3392 after the single currency touched a four-month high of $1.3416 on Tuesday. An options barrier was reported at $1.3450. Growing anticipation that the Fed will pare its purchases also led to a sharp rise in longer-dated U.S. Treasury yields over the past six weeks. Last month, the benchmark yield on 10-year U.S. notes jumped 46 basis points, its biggest one-month jump in nearly 2-1/2 years, according to Reuters data. "I think the market just wants a united message: tapering or not?" said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo. "The uncertainty there has led to some excess volatility, which has led to people pulling out of some markets."