* Caution ahead of Fed meeting, concerns about impact of
* Aussie drops after more dovish-than-expected RBA minutes
* 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 higher in
Asia on Tuesday, but was kept to a narrow range by caution ahead
of this week's U.S. Federal Reserve meeting and concern about
escalating violence in Iraq.
By contrast, the Australian dollar was one of the session's
biggest movers, slipping after minutes of the central Reserve
Bank of Australia's June 3 meeting revealed that policymakers
were unsure if their stimulus would be sufficient.
The Australian dollar AUD=D4 slipped more than a quarter of
U.S. cent to a session low of $0.9354, and was last down 0.4
percent at $0.9358.
"The Aussie came off after the RBA, as these comments are
quite dovish," said Bart Wakabayashi, head of foreign exchange
for State Street Global Markets in Tokyo.
"They're obviously trying to talk down the Aussie, they're
trying to prepare for maybe tougher times ahead."
Against its Japanese counterpart, the dollar ticked up about
0.1 percent to 101.98 yen, holding well above a two-week
low of 101.60 yen marked on Thursday.
The euro also added about 0.1 percent to 138.31 yen
, remaining above its from a four-month low of 137.70
yen touched overnight. Against the dollar, the common currency
inched about 0.1 percent lower to $1.3564.
The dollar index, which tracks the greenback against a
basket of major rivals, edged up about 0.1 percent to 80.512.
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 2.591
percent, slightly down from Monday's U.S. close of 2.599
The U.S. central bank is expected to announce a further
reduction in its monthly bond purchasing program, but most
market participants do not expect an interest rate hike until
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 data on Monday 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
4 percent, though the recently rising tensions in Iraq have
bolstered crude oil prices and raised the spectre of slower
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.
Sterling was down about 0.1 percent on the day at $1.6962
. 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 has 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 Wednesday, as well as to consumer inflation data due later on
(Editing by Shri Navaratnam & Kim Coghill)