By Brigid Riley

TOKYO (Reuters) – The U.S. dollar held steady against the yen and other major rivals on Wednesday as investors waited to see whether the Federal Reserve will deliver a hawkish cut before the Bank of Japan and other central banks meet this week.

The Fed is widely expected to deliver a 25-basis-point interest rate cut at the end of its two-day policy meeting on Wednesday, with markets pricing in a 97% probability, according to the CME’s FedWatch tool.

Focus will fall on policymakers’ new economic projections for the upcoming year released alongside the decision, namely how much further Fed officials think they will reduce rates in 2025.

Given the string of robust inflation and activity data, the Fed may signal a slower pace going ahead, revising projections to indicate three cuts in 2025 instead of the current four, Tony Sycamore, market analyst at IG, wrote in a note to clients.

“If the median dot were to show just two cuts, this may be considered more hawkish, (although) it would align with current pricing in the rates market,” he said.

Data on Tuesday showed a resilient U.S. economy after retail sales beat expectations by jumping 0.7% in November, backed by an uptick in motor vehicle and online purchases.

Investors are also weighing the possible impact of promised tariffs and tax cuts by the incoming Trump administration on the Fed’s outlook. 

The , which measures the greenback against six rivals, was little changed, down 0.04% at 106.89 after hitting its highest since Nov. 26 at 107.18 on Monday.

Against the yen, the dollar was up 0.12% at 153.65, having given up some of its recent gains in the previous session as U.S. Treasury yields dipped ahead of the Fed’s decision. [US/]

Markets have significantly reduced bets the Bank of Japan (BOJ) will raise rates on Thursday in favour of a January hike following a slew of media reports indicating the bank may take a cautious stance.

Japan’s exports rose for a second straight month in November, data showed on Wednesday.

The Bank of England is also expected to hold rates steady on Thursday. Investors further reined in bets on cuts next year after data on Tuesday showed British wage growth picked up more than expected. 

Sterling was nearly flat at $1.27095 ahead of CPI figures for November scheduled for release later in the day.

The euro sat at $1.0502, up 0.09%.

Among other central banks meeting this week, Sweden’s Riksbank is seen cutting rates by as much as half a point, while the Norges Bank will likely leave rates unchanged.

The Swedish crown held at 10.9469. The Norwegian krone hovered around 11.1793 against the greenback.

Elsewhere, the traded at 7.2885 per dollar, not far from a 13-month low touched against the dollar on Tuesday amid dour expectations for Chinese economic growth.

The Australian dollar, which tends to act as a liquid proxy for the yuan, dipped 0.17% to $0.6326 against the greenback, its lowest since November 2023.

The fetched $0.57565, up 0.04%.

In cryptocurrencies, fell 0.54% to $105,836.57 after hitting a high of $108,379.28 in the previous session.