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The dollar fell ahead of the U.S. Federal Reserve’s two-day policy meeting, while Japan’s currency advanced despite mounting anticipations that the Bank of Japan (BOJ) will steady this week as market players remained cautious over the impact of further stimulus.  

The greenback fell about 0.9 percent against the yen and ended the session at 104.84, while the euro lost 1 percent to settle at 115.19.

A spending package of about 20 trillion yen is compiled by Tokyo, with sources citing that  the actual spending is far less than the suggested headline number.

"The Japanese government's fiscal stimulus appears to be 'buy the rumour, sell the fact,'" said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

"It might not be enough to boost Japanese growth, at least compared to the strong expectations at first," he said.

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According to Nikkei news, the country is expected to inject worth 6 trillion yen in direct fiscal outlays into the economy in the future.

"For the yen, what matters most in our opinion is the 'mamizu' or real water content of the fiscal package - more so than the headline total which is easily inflated," said Ray Attrill, global co-head of FX strategy at National Australia Bank. "The bigger this is, the more stock market supportive it will be and negative for the yen."

Japan’s government forecasts on Tuesday highlighted hefty pressures on policymakers to help lift the economy. The country is expected to miss its nominal gross domestic product of 600 trillion yen in fiscal 2020, and may not attain it even by fiscal 2024 if growth continued to slow down.    

Several analysts were surveyed after the two-day policy meeting, citing most of them expects BOJ to take easing steps.

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However, some are wary of the central bank risks initiating a market backlash if it will  missed market players’ easing anticipations.

Greenback Drops 1 percent

The dollar lost over 1 percent against the yen during the course of Tuesday’s session, as market players expect the Bank of Japan to proceed with easing.

The greenback has seen a 1 percent drop and end at 104.71 yen after posting session-lows of 104.625 yen earlier, suggesting its lowest level on the record.

Meanwhile, Japan’s government aims at shedding a spending package of 20 trillion yen, citing actual public spending will strongly settle away from the suggested number.

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