FOREX-Dollar drifts as market eyes hints of Fed pause

                                
 By Eric Burroughs
                                
 TOKYO, April 30 (Reuters) - The dollar was little changed on
Wednesday, with investors bracing for an expected Federal Reserve
interest rate cut and a tweaked policy statement indicating the
central bank may pause its aggressive run of rate slashes.
                                
 The prospect of the Fed taking a break from trying to
underpin the weakening economy with lower rates has helped the
dollar rebound from record lows struck versus the euro last week.
                                
 The Fed is expected to trim rates by a quarter percentage
point to 2 percent, which would take its total cuts over the past
seven months to 3.25 percentage points. But the Fed is expected
to repeat that it will act as necessary to help foster growth.
[ID:nN28477370]
                                
 Reports on Tuesday highlighted the depths of the U.S.
economy's troubles, with house prices posting a record drop in
February and consumer confidence hitting a five-year low in
April. [ID:nN29321465]
                                
 But with the Fed already having chopped rates lower and
inflation pressures from food and energy surging, the central
bank is expected to assess its efforts to underpin the economy
and see how much coming tax rebates help spur spending.
                                
 Gerrard Katz, head of North Asia currency trading at Standard
Chartered in Hong Kong, said the risk for the dollar is that the
Fed statement is not as hawkish as market players have hoped for.
                                
 "They've got to leave the door open to more cuts. So there's
a risk of the dollar selling off. But there's a lot of other bad
news in the world showing the global economy is slowing," Katz
said.
                                
 The euro has come under fire after an array of data in the
past week showing euro zone growth is faltering. Irish consumer
confidence hit an all-time low in April, while French consumer
sentiment tumbled to its lowest in more than two decades.
                                
 Trading activity was subdued as many investors take off for
holidays around the region. Japanese markets reopened after being
shut on Tuesday for the first of the country's Golden Week
holidays, which also include Monday and Tuesday next week.
                                
 Many markets around the world will be closed on Thursday for
May 1 holidays.
                                
 The dollar was down 0.1 percent from late U.S. trade at
103.93 yen <JPY=>, but holding in a narrow range. It edged down
from day's high of 104.21 yen as buying at the end of the month
from Japanese investors and importers receded while interbank
traders shed long-dollar positions before the Fed delivers rate
decision later in the day, traders said.
                                
 On Monday the dollar hit a two-month high of 104.83 yen,
staging a sharp rebound from the 13-year low of 95.77 yen hit in
mid-March.
                                
 The euro edged up 0.1 percent to $1.5580 <EUR=>, still near a
one-month low of $1.5540 hit the previous day. Against the yen,
the single currency was largely unchanged at 161.85 yen
<EURJPY=R>.
                                
 Sterling dipped after data showing British consumer sentiment
hit a 16-year low and on news that British utility BG Group plc
<BG.L> made a A$13 billion ($12.1 billion) offer for Australia's
second-largest power retailer Origin Energy. [ID:nSYD268961]
                                
 Sterling edged down 0.1 percent to $1.9675 <GBP=D4> after
tumbling the previous day on data showing British retail sales at
their weakest in 2-