LONDON (AFX) - The dollar edged lower against the yen in quiet early trading, falling below the 117.00 yen level ahead of Wednesday's Federal Reserve decision on interest rates.
With a lack of significant economic news today, dealers noted the major currencies were trading within narrow ranges, and dollar's move lower was largely due to options-related factors.
"We're stuck in the middle waiting for Greenspan on Wednesday," said Paul Bednarczyk, currency strategist at 4CAST.
Following Fed Chairman Alan Greenspan's testimony before the Senate Budget Committee last week, many analysts forecast the central bank to cut short-term rates by 50 basis points at the conclusion of its two-day meeting.
The euro was confined to recent ranges, trading below the 0.9300 usd area, while sterling/dollar found some support from potential merger and acquisition flows, dealers said.
In economic news, Japanese industrial production rose 1.5 percent in December from November, the Ministry of Economy, Trade and Industry said.
Along with the Fed meeting, investors await key U.S. economic news, including Thursday's National Association of Purchasing Managers' survey of manufacturing and Friday's employment report, both for January.
Economists at Bear Stearns in New York forecast the payroll data to suggest further slowing in the economy.