* Euro hovers near 6-month high versus dollar
* Market awaits Fed minutes due later on Wednesday
* Aussie and kiwi remain under pressure
By Masayuki Kitano and Lisa Twaronite
SINGAPORE/TOKYO, Aug 21 - The dollar held steady
against the yen and hovered near a half-year low against the
euro on Wednesday, as investors awaited minutes of the U.S.
Federal Reserve's latest meeting for clues on its policy
Speculation that the U.S. central bank is poised to begin
tapering its $85 billion a month in asset purchases as early as
September is generally positive for the dollar, as it tends to
lift U.S. Treasury yields. But it can also pressure equities and
increase the appeal of perceived safe-haven currencies, such as
the yen and Swiss franc.
"We expect the minutes of the July FOMC meeting to show that
committee members viewed the improvement in labour markets and
reduced downside risk as sufficient to signal that many on the
committee stand ready to reduce the pace of purchases in
September, should current trends continue," strategists at
Barclays wrote in a note to clients.
"Overall, we expect the minutes to maintain the bifurcated
message of recent Fed communications: sounding hawkish on
tapering and dovish on rate hikes," they said.
The minutes of the Fed's July meeting are due to be released
later on Wednesday.
The dollar held steady at about 97.28 yen, staying
above a one-week low of 96.91 yen hit on Tuesday on trading
The euro was steady at $1.3423. On Tuesday, the euro
had set a six-month high of $1.3453 as the yield premium that
10-year U.S. Treasury notes offer over German Bunds
The 10-year U.S. Treasury yield has come down from a
two-year high of 2.90 percent set on Monday, as market
expectations that the Fed may soon start scaling back its
monetary stimulus roiled emerging markets and added a safe haven
bid to U.S. debt.
"I think that the overall move higher in the euro lacks
conviction, especially given that the ECB has provided dovish
forward guidance," said Sim Moh Siong, FX strategist for Bank of
At its policy meeting in early August, the European Central
Bank (ECB) had left interest rates at a record low of 0.5
percent and affirmed that they will remain there for some while
to come and could yet fall further.
In addition, if the strength in the euro were to hurt euro
zone exports and the economy and put an end to upside surprises
in European data, that could then dent the single currency, Bank
of Singapore's Sim said.
The greenback eased 0.1 percent against the Swiss franc to
0.9165, after tumbling to about 0.9147 on Tuesday, the
dollar's lowest level versus the Swiss franc since June 13.
Against a basket of major currencies, the dollar held steady
The Australian and New Zealand dollars fell, dented by
weakness in Asian equities.
The New Zealand dollar edged down 0.3 percent to $0.7939
, having fallen more than 1 percent in the previous
session after the Reserve Bank of New Zealand announced home
lending restrictions and said the kiwi dollar was overvalued.
The Australian dollar slipped 0.4 percent to $0.9037
, dented by weakness in Asian equities. The Australian
dollar was again being sold by investors as a hedge against
weakness in Asian markets.