Dollar pauses in Asia ahead of Fed rate decision

April 30, 2008 (AFP) – The dollar was little changed in Asian trade on Wednesday as investors sat on their hands ahead of a Federal Reserve interest rate decision and a US economic growth report, dealers said. A decision by Japan’s central bank to leave its key interest rate unchanged at 0.5 percent had little impact.

The dollar was trading at 103.90 yen in Tokyo afternoon trade compared with 103.98 late on Tuesday in New York.

The euro was almost flat at 1.5576 dollars against 1.5572 while edging down to 161.79 from 161.94.

As well as the Federal Reserve rate decision, traders were cautious ahead of an estimate of US first-quarter gross domestic product (GDP) growth later Wednesday.

“The market won’t move until the GDP and the Federal Reserve’s policy-setting meeting,” said Yuya Koike, a forex dealer at Hachijuni Bank.

Despite recession fears in the United States, most economists on Wall Street expect a barely positive reading of 0.5 percent annualised GDP growth in the first quarter.

Dealers were expecting the US Federal Open Market Committee (FOMC) to cut its base lending rate by a quarter point to 2.0 percent Wednesday.

Saburo Matsumoto, chief forex strategist at Sumito