Dollar Edges Lower Against Yen, Euro, Barely Fazed by Fed's Tightening Bias
NEW YORK -- The dollar finished slightly lower against the yen and euro, barely reacting to the Federal Open Market Committee's decision to tilt toward raising U.S. interest rates.</br></br>In the longer term, the bias toward higher rates, disclosed after the meeting of the Federal Reserve's policy-setting panel, is expected to help the dollar continue its climb against the yen and keep it strong against the euro.</br></br>After trading flat for most of the session in New York, the dollar at first edged higher against the yen and euro on the FOMC announcement before sliding for a muted reaction overall.</br></br>The dollar has gained three yen since May 10 on the widening gap between U.S. and Japanese bond yields, so the FOMC's announcement "does lend support to that interest-rate differential," said Susan Stearns, foreign-exchange director at the Bank of Montreal in New York.</br></br>The Organization for Economic Cooperation and Development said it expects the Japanese economy to contract by 0.9% in 1999, compared with its earlier estimate of 0.2% growth. The yen also is pressured by speculation that rallies in Japanese stocks are near their limits, after a rise of more than 20% in the benchmark Nikkei 225 Stock Average since January.