The dollar rose against the yen in Asia Wednesday morning as investors await the end of the US Federal Reserve's policy meeting to find out its plans for its stimulus programme. The greenback bought 102.99 yen in Tokyo, up from 102.63 yen in New York Tuesday but was still well off a five-year high of 103.93 yen reached at the end of last week. The euro, buoyed by improving eurozone inflation data, strengthened to $1.3769 and 141.82 yen against $1.3765 and 141.28 yen. Fed policymakers will wrap up their two-day meeting after debating whether the economy is strong enough to immediately scale back its $85 billion a month quantitative-easing programme. Analysts are split on whether it will act right away or wait until early in the new year as fourth-quarter data flows in. A pullback is seen as a plus for the dollar. "Firmer data, especially in the US jobs market over recent weeks and the recent budget deal have raised the odds of tapering being announced (Wednesday) although a move in January still looks more likely," Credit Agricole said. "Whether the Fed takes its foot off the QE pedal (Wednesday) or in January is probably a moot point, however, as the bottom line is that tapering is very much going to happen and markets will need to adjust sooner rather than later." With US November housing starts figures also set to be released Wednesday, dealers said they're keeping a close eye on any statements from Fed chief Ben Bernanke about US economic conditions and any Fed move on interest rates. The dollar-yen rate won support from market speculation that Prime Minister Shinzo Abe may announce on Thursday further details about his strategy to boost the Japanese economy. Currency markets hardly moved after data out of Tokyo showed the nation's trade deficit expanded 35.1 percent on-year in November, driven by soaring energy costs in the wake of the Fukushima nuclear crisis. The yen has been under pressure on expectations the Bank of Japan, which holds a two-day meeting this week, will unveil further easing measures to counter slowing growth. The euro was lifted by data Tuesday that showed inflation in the 17-nation eurozone rose to 0.9 percent in November from a four-year low of 0.7 percent in October. The figures will ease concerns that the bloc risks a damaging cycle of deflation.

Source