(Corrects to say UK jobs data in the second paragraph)
* Yen falls to 3-1/2-month low versus euro, four-year low
* Obama speech reduces chances of U.S. strike against Syria
* Fed meeting in focus as markets await stimulus trim
By Wanfeng Zhou
NEW YORK, Sept 11 The yen hovered near recent
lows on Wednesday as easing tensions over Syria dented demand
for the safe-haven Japanese currency, while uncertainty about
the Federal Reserve's stimulus plan kept the dollar range-bound.
The yen hit a seven-week low against the dollar and a
3-1/2-month trough versus the euro, before recovering losses. It
also fell to a four-year low against the British pound, which
rallied after U.K. jobs data.
U.S. President Barack Obama pledged on Tuesday to explore a
diplomatic plan from Russia to take away Syria's chemical
weapons, although he voiced scepticism about it and urged
Americans to support his threat to use military force if needed.
Traders said uncertainty about Syria and the Fed could keep
major currencies in a range. The U.S. central bank meets next
Tuesday and Wednesday and investors will look for details on the
pace and timing of the central bank's plans to scale back its
bond buying program.
"Until we can get through that meeting and see what the Fed
says, we're expecting continued consolidation here," said Eric
Viloria, currency strategist at Forex.com.
The dollar was last down 0.2 percent at 100.17 yen,
not far from a session peak of 100.60 yen, according to Reuters
data, which was the strongest since July 22. Analysts said the
dollar would likely hold above the 100 yen level in coming
A string of solid data out of China this week, which
reinforced expectations that the world's No. 2 economy is
stabilizing after slowing for more than two years, also
pressured the yen as investors' appetite for riskier assets
The euro was down 0.2 percent at 132.93 yen,
having hit a an intra-day peak of 133.36 yen, its highest since
May 22. Sterling rose 0.2 percent to 158.13 yen.
"It is a combination of things... tensions in Syria, which
had been negative for risk-assets and supported the yen, have
eased a bit. Also global economic data over the last couple of
weeks has been relatively good," said Paul Robson, currency
strategist at RBS Global Banking.
The euro was little changed at $1.3267, while the
dollar index, a measure of the greenback versus six major
currencies, slipped 0.1 percent to 81.745.
Although the U.S. jobs report last Friday fell short of
market expectations, many investors expect the Fed to start
reducing its bond-buying programme at next week's policy
meeting, underpinning the dollar.
"Markets are positioned for the Fed to taper... any attempt
to reduce stimulus from the current $85-billion-per-month will
probably be done modestly," said Niels Christensen, FX
strategist at Nordea.
A Reuters poll on Monday showed economists expect the Fed to
announce a moderate reduction to its $85 billion monthly
asset-buying program by some $10 billion.
Better-than-expected economic data and improving market
sentiment has helped the single currency lately, but analysts at
Morgan Stanley warned the euro's strength could be short-lived
and they remain sellers on any rallies.
"A break above the August high of (around) $1.3450 is
unlikely, and we would look to sell around the $1.3320 level,"
they wrote to clients.
(Additional reporting by Anooja Debnath in London; Editing by