September 26, 2018 / 1:48 AM / in 7 months

FOREX-Dollar sticks to tight ranges ahead of widely expected Fed rate hike

* Dollar hovers at near 10-week high vs yen

* Aussie, kiwi gain on New Zealand business sentiment figures

* Graphic: World FX rates in 2018

By Daniel Leussink

TOKYO, Sept 26 (Reuters) - The dollar largely stuck to tight ranges on Wednesday as investors awaited policy cues from the Federal Reserve, which is widely expected to raise interest rates later in the day, and as the Sino-U.S. trade dispute dampened demand for risky assets.

Investors were also watching talks between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe due in New York later on Wednesday to see if the two countries have made progress on how to promote bilateral trade following a round of trade negotiations.

Global markets have been on edge in the past few months as the escalating Sino-U.S. trade dispute stoked uncertainty about the outlook for global growth and broader monetary policy for some developed and emerging market economies.

“In the trade dispute, China and the United States have made no real progress on having direct negotiations,” said Kumiko Ishikawa, senior analyst at Sony Financial Holdings.

“The market isn’t shifting aggressively to a risk-on mode as a result,” she said.

The Fed will end its two-day policy meeting later on Wednesday at which it is expected to raise interest rates for the eighth time since late 2015. Investors are also counting on another rate hike before year-end, though the outlook for 2019 is less clear.

The dollar has benefited from a hawkish rate outlook all year. But in the last few weeks it has lost steam as other economies, such as the euro zone, improved and put them closer to a shift to tighter monetary policy.

The dollar index, which measures the greenback against six major currencies, has slipped around 3 percent since mid-August.

The index edged higher to 94.187 on Wednesday, sitting near a 2-1/2 month low of 93.814 touched on Friday.

The dollar changed hands at 112.94 Japanese yen, close to a near 10-week high of 113.02 yen touched earlier in the session.

Sony senior analyst Ishikawa said investors were paying attention to the Trump-Abe talks on the sidelines of the United Nations General Assembly meeting in New York.

Trump has made clear he is unhappy with Japan’s $69 billion trade surplus with the United States - nearly two-thirds of it from auto exports - and wants a two-way agreement to address it.

Japan and the United States have reached a broad understanding over how to promote bilateral trade and may announce specifics on Wednesday, Economy Minister Toshimitsu Motegi was quoted as saying after meeting U.S. Trade Representative Robert Lighthizer.

Motegi said he hoped to give more details after a scheduled summit of the two countries’ leaders on Wednesday in New York, Kyodo News reported.

Meanwhile, the Australian and New Zealand dollars got a boost after figures showed New Zealand business sentiment rose from a decade-low in September.

The Aussie advanced 0.3 percent to $0.7275. The kiwi gained 0.4 percent to $0.6676.

The euro edged down to $1.1761.

European Central Bank Chief Economist Peter Praet said on Tuesday there was nothing new in comments from ECB President Mario Draghi, who had expressed confidence in euro zone inflation and wage growth.

The pound, meanwhile, traded a flinch lower at $1.3177, giving up some gains after rising about half a percent during the previous session.

Reporting by Daniel Leussink Editing by Eric Meijer

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