TOKYO- The dollar held steady in Asia Tuesday ahead of a key US Federal Reserve policy meeting, while the euro won support from upbeat business activity data for the embattled eurozone.
The greenback fetched 103.00 yen in Tokyo afternoon trade, nearly flat from 103.02 yen in New York Monday, while the European single currency bought $1.3768 and 141.76 yen from $1.3761 and 141.77 yen.
“The focus ahead will be firmly on the Fed” meeting, Credit Agricole said, adding that there is an element of caution in the market as the outcome it largely uncertain.
Data Monday showed US industrial output expanded 1.1 percent in November with manufacturing showing a fourth consecutive monthly gain.
The news added to speculation that the central bank will this week announce a wind-down of its $85 billion a month bond-buying programme.
Adding to downward pressure on the yen is a growing sense that the Bank of Japan will boost its own monetary easing scheme after a sharp slowdown in third-quarter economic growth — despite an upbeat business sentiment survey Monday. The bank holds a two-day policy meeting from Thursday.
“It is highly unlikely that the Bank of Japan adjusts policy at its meeting later this week but further action next year remains likely,” Credit Agricole said.
The euro enjoyed support thanks to figures showing business activity in the 17-nation eurozone ticked up in December.
Markit Economics said its eurozone composite purchasing managers index (PMI) rose to 52.1 from 51.7 in November. Anything above 50 is considered growth and anything below points to contraction.
Manufacturing led the upturn, with output rising for the sixth straight month. For services however, the rate of growth slowed for the third consecutive month.
The euro has seen healthy buying since the European Central Bank this month held off any new interest rate cuts despite prolonged low inflation. That followed a surprise cut in November of its central refinancing rate by a quarter-point to counter the threat of deflation.
The latest eurozone inflation figures are due out later Thursday.
The dollar was mixed against other Asia-Pacific currencies.
The greenback weakened to Tw$29.63 from Tw$29.64 the previous day, to 1,051.75 South Korean won from 1,052.55 won, to 44.16 Philippine pesos from 44.17 pesos, and to 61.96 Indian rupees from 62.20.
The unit rose to 12,126 Indonesian rupiah from 12,120 rupiah while it was unchanged at 32.02 Thai baht.
The Australian dollar edged down to 89.42 US cents from 89.52 cents.
The “Aussie” fell below the 90 US cent mark last week as the head of the country’s central bank said he wanted to see it at 85 US cents to help stimulate trade-exposed sectors of the economy.
The Chinese yuan changed hands at 16.97 yen from 16.91 yen.