- FOMC maintains policy rate in 3.50%-3.75% range as expected
- Fed funds futures imply U.S. central bank to stand pat all year
- BOJ votes 8-1 to hold interest rates
LONDON/SINGAPORE, March 19 (Reuters) - The U.S. dollar was steady on Thursday while the yen strengthened slightly against the greenback after the Bank of Japan left rates unchanged and its governor, Kazuo Ueda, gave remarks in the shadow of the Iran conflict.
The yen was 0.3% firmer at 159.40 per dollar, having picked up during Ueda's comments. The BOJ kept its rate at 0.75% and maintained its assessment that the economy was recovering moderately.
Ueda was even more cautious than usual in his remarks at the press conference, said David Chao, global market strategist for Asia-Pacific at Invesco in Singapore.
"It's so hard to read the tea leaves to begin with, and today was even more so," he said.
The Bank of Japan's decision comes midway through a pivotal stretch of major central bank meetings, as traders hunt for clues on how policymakers will respond to the energy price shock.
The Federal Open Market Committee held interest rates steady on Wednesday and projected higher inflation, steady unemployment and a single reduction in borrowing costs this year, a path that Fed Chair Jerome Powell said was subject to unusually high uncertainty as policymakers take stock of the U.S.-Israeli strikes on Iran.
"Chair Powell was extremely vague on how the FOMC would respond to the war," said Steve Englander, global head of G10 FX research at Standard Chartered in New York.
"The hawkish part was the frustration Powell expressed at the slow pace of disinflation, very explicitly conditioning further policy rate cuts on inflation moving closer to target."
The dollar was steady Thursday as traders assessed the Fed's decision to hold rates against the backdrop of accelerating U.S. inflation amid the raging Middle East conflict and surging oil prices.
The U.S. dollar index , which measures the greenback's strength against a basket of six currencies, was last 0.05% lower at 100.16, near its highest levels over the last four months, as traders reined in bets that the Fed would cut interest rates later this year.
Financial markets are almost fully pricing in a hold at the U.S. central bank's April 29 meeting, with expectations of further easing pushed out to 2027.
Oil prices climbed further, with Brent crude futures rising 5.9% to $113.74 a barrel after Iran attacked several energy facilities across the Middle East following a strike on its South Pars gas field.
The euro nudged 0.14% higher to $1.1465, while the British pound edged up 0.1% to $1.3266, after data showed that British wages, excluding bonuses, rose at their slowest pace since late 2020 in the three months to January.
Both the European Central Bank and the Bank of England are expected to keep rates on hold when they announce policy decisions later on Thursday.
The Australian dollar edged up 0.2% to $0.7037, after data for February showed unemployment ticked up to 4.3%, slightly above market estimates, and the Reserve Bank of Australia on Thursday warned the conflict in the Middle East was a material risk to the domestic economy.
Bitcoin was around 1.5% lower at $70,144.24, while ether was down 0.8% at $2,170.70.
Reporting by Sophie Kiderlin in London and Gregor Stuart Hunter in Singapore; Editing by Shri Navaratnam, Thomas Derpinghaus and Andrew Heavens
Source: Reuters