Dollar drops as Fed looms

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    NEW YORK- The dollar dropped to a two-week low against the yen on expectations the Federal Reserve will maintain its downbeat stance on the US economy as it grapples with the COVID-19 pandemic, and keep US interest rates near zero for some time.

    In afternoon trading, the dollar fell 0.3 percent against the yen to 105.46, after earlier sliding to a two-week low of 105.30 yen.

    A break below 105.20 yen could pave the way for further technical selling, analysts said.

    The dollar index was little changed at 93.062, as the greenback recovered somewhat after the euro reversed earlier gains.

    The euro was last down 0.1 percent at $1.1851.

    Earlier, the euro gained after the ZEW economic sentiment survey showed investor sentiment in Germany rose in September, despite headwinds from Brexit and rising coronavirus infections.

    The euro along with commodity-linked currencies such the Australian and New Zealand dollars gained after positive Chinese data overnight.

    China’s industrial output accelerated and retail sales grew for the first time this year, beating analysts’ forecasts.

    That pushed the Chinese yuan to its highest since May 2019 against the dollar, which was last down 0.4 percent at 6.779 yuan in the offshore market.