* Dollar steady below 6-week high vs yen
* Weak U.S. auto sales data dampens sentiment toward dlr
* Fed policy decision, statement due later on Wednesday
* Kiwi gets lift from rise in global dairy prices
By Masayuki Kitano
SINGAPORE, May 3 The dollar traded below a six-week high against the yen on Wednesday, as the market awaited the Federal Reserve's policy statement for hints on the U.S. interest rate outlook, while the kiwi rose on the back of higher dairy prices.
The Federal Reserve is widely expected to keep interest rates unchanged at the end of its two-day policy meeting on Wednesday, but investors will look to see whether the central bank downplays the recent soft patch in the economy to leave the door open for a rate increase in June.
The dollar last traded at 112.04 yen, not very far from Tuesday's peak of 112.33 yen, the greenback's strongest level since March 21.
With Japanese markets closed for a public holiday on Wednesday and the rest of the week, market liquidity is likely to be thinner than usual.
The greenback pulled away from its six-week high after weak U.S. April auto sales data released on Tuesday added to worries that the Fed may eventually take a more dovish-than-expected view on interest rate increases over the remainder of the year.
The weak U.S. auto sales figures could make market participants wary of actively buying the dollar against the yen for now, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
"Concerns about geopolitical risks such as North Korea had weighed on the dollar against the yen recently... But the focus is shifting to whether the (strength) of U.S. economic fundamentals is for real," he said.
"There is more data coming up including the jobs data, so those need to be watched closely," Okagawa said, referring to the U.S. nonfarm payrolls report due on Friday.
The euro inched up 0.1 percent to $1.0934, trading within sight of a 5-1/2 month high of $1.0951 scaled last week.
The euro saw a relief rally last week, after Emmanuel Macron's victory against anti-euro nationalist Marine Le Pen in the first round of France's presidential elections. The runoff vote is on May 7.
The New Zealand dollar rose in early Asian trade on Wednesday, after global dairy prices rose for the fourth international auction in a row, a strong indicator that last year's recovery is back on track.
The New Zealand dollar touched a one-week high at $0.6969 and was last trading at $0.6951, up 0.2 percent from late U.S. trading on Tuesday. (Reporting by Masayuki Kitano; Editing by Sam Holmes)
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