* Caution ahead of Fed meeting, concerns about impact of
* Brighter U.S. data contrasts with IMF's downbeat
* Sterling steadies close to 5-year highs; BOE minutes
By Lisa Twaronite
TOKYO, June 17 The dollar fluttered in a narrow
range in Asia on Tuesday, caged by caution ahead of this week's
U.S. Federal Reserve meeting and concern about the developing
crisis in Iraq.
U.S. and Iranian officials conferred about the Iraqi crisis
on the sidelines of a meeting in Vienna, sources said.
Meanwhile, Washington said it could launch air strikes if needed
to quell the Sunni Islamist rebellion.
U.S. President Barack Obama notified Congress under the War
Powers Resolution on Monday that the United States would deploy
up to 275 military personnel to provide support and security for
U.S. staff in Iraq.
"While much of Iraq's vital energy infrastructure and fields
are in Shia-dominated southern Iraq, the negative news suggests
the Iraqi government will have trouble controlling the
situation," strategists at Barclays said in a note to clients.
An interruption to Iraq's oil exports and sustained rise in
global oil prices could eventually sap growth.
The dollar was steady on the day at 101.83 yen,
holding above a two-week low of 101.60 yen marked on Thursday.
The euro was slightly higher at 138.28 yen, but
remained not far from a four-month low of 137.70 yen touched
Against the dollar, the common currency was treading water
at $1.3575, flat from the previous session.
U.S. Treasury yields also stuck close to their recent ranges
ahead of the two-day Fed meeting that will begin later in the
session, with the benchmark 10-year yield at 2.598
percent, nearly flat from Monday's U.S. close of 2.599 percent.
The U.S. central bank is seen announcing a further reduction
in its monthly bond purchasing program, but most market
participants do not expect an interest rate hike until mid-2015.
The International Monetary Fund cut its forecast for U.S.
growth on Monday and predicted the economy would not reach full
employment until the end of 2017, which would suggest interest
rates might be held near zero for longer than financial markets
But Monday's data painted an upbeat picture of the U.S.
economy in the present quarter following weak start to the year
due to a harsh winter. U.S. manufacturing output rose in May and
June factory activity in New York state accelerated sharply,
while confidence among homebuilders perked up this month.
Growth estimates for the April-June quarter range as high as
Sterling was slightly down at $1.6976, after it
climbed above $1.70 against the dollar for the first time in
nearly five years on Monday on expectations that Britain might
become the first major economy to tighten monetary policy since
the 2008 financial crisis.
The pound gained more than 1 percent since Bank of England
Governor Mark Carney signalled the new tightening outlook on
Thursday. His stance means the market will be paying close
attention to the minutes of the BoE's June policy meeting on
(Editing by Shri Navaratnam)