* Yen falls to 3-1/2-month low vs euro, four-year low vs
* 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 dollar fell to near
two-week lows against major currencies on Wednesday as some
traders pared back bets on a reduction in stimulus by the
Federal Reserve next week.
The yen rebouned against the dollar, though remained close
to a seven-week low struck earlier. The yen also hit a
3-1/2-month trough versus the euro, and a four-year low against
sterling, as easing tensions over Syria dented demand for the
safe-haven Japanese currency.
Traders said uncertainty about Syria and the Fed could keep
major currencies in a range. The Federal Open Market Committee
meets next Tuesday and Wednesday and doubts about a scaleback in
stimulus have risen following last Friday's disappointing jobs
"I don't think there's a whole lot of room before
Wednesday's FOMC, but I do think there's going to be a little
bit of pressure on the dollar heading into that as more traders
take bets off of the likelihood of Fed taper," said Andrew Dilz,
foreign currency trader at Tempus Inc in Washington.
The dollar index, a measure of the greenback versus six
major currencies, slipped 0.3 percent to 81.593, having
hit a low of 81.506, the weakest since Aug. 29.
The euro rose 0.3 percent to $1.3301. The dollar fell
0.3 percent to 100.12 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 sessions.
Lower U.S. Treasury yields also contributed to pressure on
the dollar, analysts said.
"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.
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 skepticism about it and urged
Americans to support his threat to use military force if needed.
A string of solid data out of China this week reinforced
expectations that the world's No. 2 economy is stabilizing after
slowing for more than two years.
The euro was down 0.1 percent at 133.07 yen,
having hit a an intra-day peak of 133.36 yen, its highest since
May 22. Sterling rose 0.2 percent to 158.20 yen.
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.
Sterling's trade-weighted index rose to an
eight-month high on Wednesday as the UK jobless rate dropped,
supporting bets that interest rates could be tightened by the
end of next year.
Against the dollar, sterling rose 0.5 percent to $1.5804