Yen steady, dollar dithers as traders await BOJ, Fed decisions

Bank of Japan (BOJ) and the Federal Reserve later in the day.

Overnight, Israeli airstrikes pounded Gaza and killed more than 400 people, U.S. President Donald Trump and Russian President Vladimir Putin failed to reach an agreement on a Ukraine ceasefire and Germany's outgoing parliament approved plans for a massive spending surge.

But currency moves were largely subdued as traders were hesitant to take on fresh positions ahead of Wednesday's two main central bank events, particularly the Fed's.

The euro did scale a five-month high of $1.0955 in the previous session and last traded near that level at $1.0937, as investors were optimistic the move in Germany could revive economic growth and scale up military spending for a new era of European collective defence.

«This is a historic fiscal regime shift, arguably the largest since German reunification,» said Robin Winkler, chief German economist at Deutsche Bank Research.

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«Yet, as with reunification, a fiscal expansion does not guarantee success: the next government will need to deliver structural reforms to turn this fiscal package into sustainable growth.»

Elsewhere, the yen was little changed at 149.32 per dollar, as investors awaited the conclusion of the BOJ's two-day monetary policy meeting, where the central bank is expected to stand pat on rates.

Focus will be on governor Kazuo Ueda's post-meeting briefing for clues on how soon the BOJ could next raise rates, a decision complicated by the contrast between benign domestic data and uncertainty