The yen gained against the dollar on Thursday as investors feared that the Bank of Japan will not meet high expectations for a large stimulus package when it concludes its two-day meeting on Friday, and after the US Federal Reserve on Wednesday stopped short of flagging a near-term rate rise.
Expectations of further stimulus in Japan has dominated trading for the past few weeks and eclipsed attention paid to the US central bank's statement on Wednesday, when the Fed was seen as indicating that a September rate increase was possible, but not necessarily likely.
"Everybody is waiting for the big marquee event of the week, which is the BoJ announcement tomorrow, to see exactly how large of a stimulus package they are going to put out," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. Also, "the theme overnight was markets' basic disappointment with the FOMC statement," Schlossberg said. The dollar fell 0.48 percent to 104.87 yen. The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.50 percent to 96.573, after earlier dropping to a two-week low of 96.287.
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