TOKYO (AFX-ASIA) - The dollar was rangebound in midafternoon trading ahead of the release today of the September US National Association of Purchasing Managers' manufacturing index and tomorrow's FOMC meeting, dealers said. The release earlier today of the Bank of Japan's Tankan report failed to have any lasting impact, as "the market had well prepared for a sharp deterioration of the business confidence DI," said Yasuji Yamanaka deputy general manager of the treasury department at Nikko Trust and Banking Co Ltd. "However, the poor result made it harder for participants to buy into the the yen actively," he added. In the latest Tankan survey, the large manufacturers' diffusion index (DI) came in at minus 33, compared with market forecasts of minus 24 to minus 31. The surveyed manufacturers forecast DI will improve to minus 31 in the December Tankan report. However, Industrial Bank of Japan economist Atsuo Tominaga said he sees strong downside risk to the future trend of business sentiment for large manufacturers. "Most firms apparently were still unable to fully gauge the full impact of the Sept 11 terrorist attacks and the further deterioration of domestic demand," he said. "Many firms expect a slowdown in the export downturn in the second half, which indicates that they are still betting on a recovery in the US economy. "So, if there are any additional shocks to the already weakening economic activity, the DI of large manufacturers can trend towards the all-time low," Tominaga said. The large manufacturers DI reached a record low of minus 51 in Dec 1998. Despite the weak Tankan result, the dollar failed to gain significant ground due to caution ahead of the NAPM data, the first major business sentiment report to follow the September 11 terrorist attacks, dealers said. "The focus of the market will continue to be on the extent of the deterioration of the US economy, with the successive rate cuts since the beginning of this year failing to bolster activity notably," Yamanaka said. The consensus view in the market is that the US Federal Open Market Committee will ease rates by 50 basis points at tomorrow's meeting. Dealers said that sell orders from Japanese exporters, which have just opened their second half accounts, will continue to weigh on the top-side of the dollar, while intervention fears are expected to support its downside. "With the first half account already closed, the authority will no longer try to push down the value of the yen, but they are expected to continue to try to prevent any sharp appreciation of the yen," Yamanaka said. "So, the dollar/yen is most likely to trend in the 117.00-120.50 yen range for the time being." The euro was firmer against the dollar, but confined to a relatively small trading band ahead of the US NAPM data and the FOMC meeting, dealers said. "Given the underlying downside risk surrounding the US economy, the euro still has a chance of testing the 0.9250 usd level," Yamanaka said.