Foreign currencies markets were relatively subdued on Wednesday (21 September) as investors awaited the outcome of the latest Federal Reserve meeting.

The US central bank, which will deliver its latest policy decision at 7pm BST, is widely expected to keep interest rates unchanged at least until December.

"Markets are expecting a hike sometime in the next few months, just not today, which suggests that any move by the FOMC today would catch the markets completely unprepared," said Michael Hewson, chief market analyst at CMC Markets.

"This would have the potential to be a rather risky option for the Fed, despite significant enthusiasm from several members of the committee to go now, which means if the Fed were to move today, Janet Yellen's press conference would then be an exercise in expectations management."

The dollar, however, fells sharply against the yen after the Bank of Japan said it would keep its interest rates unchanged at negative 0.1%.

The greenback, which was largely unchanged against the euro, plummeted 0.96% against the Japanese currency to ¥100.72.

In a statement, the BoJ explained the quantitative and qualitative monetary easing [QQE] measures was proving successful, as government bond yields, lending rates, and interest rates on corporate bonds had all declined considerably in the six months since it implemented negative interest rates.

Meanwhile, in an overhaul of its massive stimulus programme, the BoJ said it would do away with its base money target and instead adopt a "yield curve control".

Marcel Thieliant, Japan's economy at Capital Economics said he expected Japan's central bank to cut interest rates further by 2017.

"The BoJ's decision to replace its target for the monetary base with a target for 10-year government bond yields has prolonged the lifespan of QQE. However, it hasn't improved the near-term prospects for hitting 2% inflation, and we continue to expect additional cuts in the policy rate."

Closer to home, meanwhile, the pound recouped some of the losses recorded on Tuesday, when it hit the lowest level in five weeks against the dollar. Sterling was up 0.13% against the euro, exchanging hands at €1.1656, and rose 0.11% against the dollar to $1.3001.

The recovery, however, could be short-lived, warned Chris Saint, senior analyst at Hargreaves Lansdown currency service. "This evening's Fed announcement could spark the next wave of volatility if it leads markets to reassess the outlook for US interest rates significantly," he said.