Dollar mixed in Asia ahead of Fed meet

The dollar was mixed in sluggish Asian trade on Tuesday with market
participants waiting for a US Federal Reserve meeting for clues on the
direction of interest rates, dealers said.

The dollar was at 108.00 yen in Tokyo morning trade, slightly up from 107.87 in New York late on Monday.

The euro edged up to 1.5519 dollars from 1.5513 and to 167.58 yen after 167.36.

The
Federal Open Market Committee (FOMC) opens its two-day meeting later
Tuesday, with dealers widely expecting it to leave US interest rates
unchanged at 2.0 percent.

"It will be difficult to take
positions all day long today ahead of FOMC," said Shigeru Nakane,
senior client manager at Resona Bank.

"Our consensus is no
change in rates. But all of the players are now paying attention to the
policy statement, trying to gauge how seriously the Fed will hint at a
future rate hike," Nakane said.

The Fed has slashed its key rate
by 3.25 percentage points since the subprime, or high-risk, mortgage
crisis erupted in mid-2007.

While market players have scaled
back their expectations of a series of US rate hikes this year, they
still see a chance of one or two quarter-point rate rises by the end of
2008 to keep a lid on inflation, dealers said.

The euro
rebounded moderately in Tokyo after sliding overnight on weak economic
indicators, including Germany's key business climate index, which
dropped to an 18-month low in June due to high oil prices.