Asia FX muted, dollar steady ahead of Fed, BOJ meetings

investing.com:

Investing.com-- Most Asian currencies kept to a tight range on Monday, while the dollar steadied near two-week highs as focus turned squarely to a swathe of central bank meetings helmed by the Bank of Japan and Federal Reserve. 

Strong U.S. inflation readings from last week put traders on guard over any hawkish sentiments from the Fed, while positive wage data and sticky inflation spurred mass speculation over whether the BOJ will end its ultra-loose policies this week.

The Japanese yen moved little on Monday after clocking a volatile week on speculation over an end to the BOJ’s negative interest rate and yield curve control policies. The BOJ kicked off its two-day meeting on Monday, with a hotly anticipated decision due on Tuesday.

The USDJPY pair had fallen as far as 146 to the dollar, especially after reports showed Japanese labor unions won large wage hikes this year. Recent data also pointed to inflation remaining sticky, with both factors giving the BOJ enough confidence to end its ultra-dovish policies.

But analysts still remained split over whether the bank will raise rates in March or April, with general consensus leaning slightly towards an April move. The BOJ is expected to raise rates by 20 basis points to 0.1% from negative 0.1%.

While any rate hikes bode well for the yen, speculation over the timing of the hike saw the USDJPY pair mark volatile moves in recent weeks. The currency pair hovered around 149 on Monday.

The dollar index and dollar index futures moved little in Asian trade on Monday, steadying near two-week highs with focus squarely on the conclusion of a two-day Fed meeting on Wednesday.

While the Fed is widely expected to keep rates unchanged, any signals on its plans for interest rate cuts in