(Corrects to clarify Powell’s perceived stance on monetary policy in third paragraph)
* Investors cautious after charges against Manafort weighs on USD
* Yen touches one-week high vs dollar
* BOJ policy decision due around 0300 GMT to 0500 GMT
* Little impact on yen expected as BOJ likely to stand pat
By Masayuki Kitano
SINGAPORE, Oct 31 (Reuters) - The dollar set a one-week low against the yen on Tuesday as investors turned cautious after U.S. President Donald Trump’s former campaign manager was charged with money laundering in the federal probe into Russian meddling in the 2016 presidential election.
Analysts said the dollar was also weighed down by reports that Trump was likely to pick Federal Reserve Governor Jerome Powell as the next head of the U.S. central bank.
Powell is seen as being more dovish on monetary policy than other contenders for the post, especially compared to Stanford University economist John Taylor, who has been regarded as another top challenger for the position.
The dollar held steady at 113.15 yen, after slipping as low as 112.97 yen in early Asian trade, its lowest level since Oct. 20.
Federal investigators probing Russian interference in the 2016 U.S. election charged Trump’s former campaign manager, Paul Manafort, and another aide, Rick Gates, with money laundering on Monday.
The latest developments in U.S. Justice Department Special Counsel Robert Mueller’s investigation into alleged Russian efforts to tilt the 2016 presidential election, pressured the dollar, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
“It’s weighing on dollar/yen a little bit. I think there’s a little bit of uncertainty,” Innes said, adding the yen drew some support as risk sentiment was looking a bit wobbly.
Asian stocks were sluggish on Tuesday following weakness on Wall Street on Monday.
Since the low-yielding yen is often used to fund investment in higher-yielding currencies and assets, it can benefit from short-covering when investors start scaling back their risk exposure.
The Bank of Japan’s monetary policy decision due later on Tuesday, at around 0300-0500 GMT, is seen as unlikely to have much impact on the yen, with the central bank all but certain to keep policy unchanged.
The BOJ is widely expected to keep intact a pledge to guide short-term interest rates at minus 0.1 percent and the 10-year Japanese government bond yield at around zero percent.
The euro eased 0.1 percent to $1.1640, but remained above a three-month low of $1.1574 touched on Friday.
The Australian dollar sagged a bit after China’s official factory PMI showed growth in China’s manufacturing sector cooled more than expected in October.
The Aussie, which is sensitive to Chinese economic data due to Australia’s strong trade ties with the Asian giant, eased 0.1 percent to $0.7679. (Reporting by Masayuki Kitano; Editing by Shri Navaratnam)