FOREX-Yen climbs to two-week high on Fed anticipation

* Fed positioning expected to dominate Asia trade - analysts
* Yen creeps to two-week high in bet on Fed action
* Policy decision due at 1800 GMT
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Sept 16 (Reuters) - The dollar and the yen both
found support on Wednesday as traders finessed positions ahead
of a U.S. Federal Reserve policy decision, while the Chinese
yuan held gains as the outlook brightened for the world's
second-largest economy.
Later in the day the Fed concludes its first meeting since
adopting a more accommodative approach to inflation.
Yen buying reflects a belief that the bank may act on that
stance, and weaken the dollar with further stimulus, while
broader dollar support points to caution about such a bet.
The yen JPY=EBS was last at a two-week high of 105.26 per
dollar. Against other majors, the dollar crept higher after
recouping a Tuesday dip though moves in morning trade were
pretty small.
"There's a feeling in the market that maybe the Fed will try
to act on its dovish tilt," said Rodrigo Catril, a senior
currency analyst at National Australia Bank in Sydney.
"Our sense is that there's a risk there that the Fed doesn't
do much more than what it's done already," he said, which could
lift U.S. yields and weigh on the yen.
The Australian dollar AUD=D3 edged down 0.1% to $0.7294
and the New Zealand dollar NZD=D3 was a fraction softer at
$0.6708. The euro EUR=EBS drifted down to $1.1837.
The Fed decision is due at 1800 GMT followed by a news
conference from chairman Jerome Powell half an hour later.
Besides policy, where any changes would likely be a shift in
its bond-buying programme to longer tenors, a major area of
focus will be on the Fed's economic projections, especially
where it figures inflation is headed. "The three to 3.5-year projection horizon will give (Fed
members) an opportunity to indicate how big an overshoot they
expect will be required to get to the 2% average inflation
target," said Standard Chartered's head of FX research Steve
Englander.
"It will also give (them) an opportunity to indicate how
much of an overshoot they are willing to tolerate."
Elsewhere the British pound has been rising from last week's
lows with stronger-than-expected jobs figures overnight and
opposition to a plan to breach the Brexit treaty. It last sat at $1.2877 GBP= and at 91.87 pence per euro
EURGBP= .
The Chinese yuan CNH=D3 also hung on to big gains won on
Tuesday when better-than-expected economic data reinforced
investors' perception that the world's second largest economy is
leading the global recovery from the COVID-19 pandemic.
In offshore trade the yuan was last at 6.7835 per dollar
having climbed as high as 6.7663 on Tuesday. CNY/