FOREX-Dollar steadies, yen rises after BOJ decision, focus on Ueda's presser

By Rae Wee

SINGAPORE, June 17 (Reuters) - The dollar steadied on Tuesday while the yen rose following the Bank of Japan's (BOJ) rate decision, with eyes on Governor Kazuo Ueda's post-meeting press conference for clues on the rate outlook.

The BOJ delivered little surprise to markets at the conclusion of its two-day monetary policy meeting, as it stood pat on rates and laid out a new plan to decelerate the pace of its balance sheet drawdown next year in the face of rising risks such as the Middle East conflict and U.S. tariffs.

The yen JPY=EBS swung between losses and gains shortly after the decision before turning decisively higher, and was last up roughly 0.2% at 144.50 per dollar.

"The BOJ still has a huge amount of (Japanese government bonds) and it's not decreasing that much. So in that case, the slowdown of the purchasing pace is probably partly because of the volatile market for JGBs and also the uncertainty over the global economy," said Tohru Sasaki, chief strategist at Fukuoka Financial Group.

The focus now turns to how Governor Ueda will balance U.S. tariff risks and domestic inflationary pressures in his post-meeting briefing at 0630 GMT.

"Markets will be particularly interested in how he categorises the inflation trends in Japan, especially in the context of heightened trade tensions," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump have yet to reach a trade deal.

In the broader market, the dollar held largely steady, as risk sentiment remained fragile with the Israel-Iran conflict entering its fifth day.

The White House said on Monday that Trump is leaving the Group of Seven summit in Canada a day early due to the situation in the Middle East, as the president has requested that the national security council be prepared in the situation room.

Trump had earlier urged everyone to immediately evacuate Tehran, and reiterated that Iran should have signed a nuclear deal with the United States.

The risk-sensitive Australian dollar AUD=D3 was up 0.13% at $0.6533, after falling earlier in the session. The New Zealand dollar NZD=D3 traded 0.1% higher at $0.6065.

Against a basket of currencies, the dollar =USD was little changed at 98.13.

"The developments out of the Middle East over the past few days threaten regional stability gravely," said analysts at DBS in a note.

"The long-simmering Israel-Iran conflict reaching a major chapter should add to market stress, but so far, the view is global spillover risks are manageable."

Still, overall moves in the currency market were largely subdued, as investors also looked ahead to other central bank decisions later in the week to guide the next move in markets.

The Federal Reserve's policy decision on Wednesday takes centre stage. Expectations are for the central bank to keep rates on hold, though the focus will be on any guidance regarding the rate outlook. 0#USDIRPR

"Markets anticipate two Fed rate cuts this year, but I expect zero," said Ronald Temple, chief market strategist at Lazard.

"Investors will carefully examine the Summary of Economic Projections for signs of potential policy easing with the dot plot and macro forecasts being focal points. I expect another shift in the dot plot toward fewer rate cuts."

Elsewhere, the euro EUR=EBS was little changed at $1.1562, while sterling GBP=D3 last bought $1.3576.

Trump signed an agreement on Monday formally lowering some tariffs on imports from Britain as the countries continue working toward a formal trade deal.