Yen rallies ahead of Fed, BoJ policy decisions

The yen rose sharply on Tuesday after a drop in oil prices hit confidence and as investors await the outcome of US and Japanese central bank meetings.

The Federal Reserve concludes its gathering Wednesday and although it is not expected to make any big announcement, its statement will be pored over for clues about policy following a run of strong data that have fanned talk of an interest rate rise.

The Bank of Japan, which closes its meeting Friday, is widely considered to be lining up a fresh wave of easing, as the government prepares a promised fiscal stimulus package to kickstart a torpid economy.

Traders tend to buy the yen as a safe investment in times of turmoil or uncertainty.

The greenback fell to 104.83 yen from 105.82 yen in New York and is well off from 106.11 yen in Tokyo earlier Monday.

The euro tumbled to 115.17 yen from 116.32 yen while it was also down at $1.0987 against $1.0993.

"Markets have shifted from a wait-and-see stand to a slightly more suspicious mode ahead of the Fed and BoJ meetings this week," National Australia Bank currency strategist Rodrigo Catril said in a commentary.