By Gina Lee

Investing.com – The dollar was down on Wednesday morning in Asia but remained near a one month high ahead of a highly anticipated U.S. Federal Reserve policy decision.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.04% to 90.468 by 13:11 AM ET (5:11 AM GMT).

The USD/JPY pair was steady at 110.06. The yen remained near a two-month low against the dollar touched earlier the month, with investors awaiting a Bank of Japan policy decision on Friday.

Japanese trade data for May disappointed, with exports growing 49.6% year-on-year and the trade balance contracting to JPY187.1 billion. However, imports grew a better-than-expected 27.9% year-on-year.

The AUD/USD pair edged up 0.15% to 0.7696 and the NZD/USD pair was up 0.32% to 0.7142.

The USD/CNY pair inched down 0.07% to 6.4008. Chinese economic data, including industrial production and the unemployment rate, is due later in the day.

The GBP/USD pair inched up 0.06% to 1.4089. The pound hit a one-month low of $1.4035 during the previous session despite the release of better-than-expected employment data, including April's average earnings index and bonus.

However, the rapid spread of the highly contagious Delta variant of COVID-19 that forced U.K. Prime Minister Boris Johnson to delay his plans to lift lockdown measures by three weeks, remains a big risk.

U.S. economic data released on Thursday said core retail sales contracted a larger-than-expected 0.7% month-on-month in May. The producer price index growing a better-than-expected 0.8% month-on-month and 6.6% year-on-year respectively in May.

Meanwhile, industrial production for May grew a better-than-expected 0.8% month-on-month but slowing down slightly to a 16.37% growth year-on-year.

The Fed is widely expected to acknowledge the first conversations about when and how fast to begin asset tempering when it hands down its policy decision later in the day.

Some investors insisted the Fed would refrain from any hints of a start in assert tempering anytime soon.

"The Fed has said they're going to be reactionary to the data... and they’ve said they want to see extended inflationary conditions before they make any commitment to tapering or hikes," State Street (NYSE:STT) Bank Tokyo branch manager Bart Wakabayashi told Reuters.

However, the dollar could rally at any hint that the Fed will bring asset tapering forward or start discussing rate hikes sooner than expected. "I think they’ll stick to the same tagline, and it will probably end up being a non-event,” Wakabayashi added.