By Hiroyuki Kachi
The dollar was a tad higher against the yen in rangebound Asia
trade Friday, with the greenback unable to find clear direction
amid a lack of fresh cues.
As of 0450 GMT, the dollar was at Y103.80 compared with Y103.72
late Thursday in New York.
The greenback firmed slightly in the mid-morning due to buying
by Japanese importers related to commercial trade ahead of regular
settlement at the end of the month.
However, with risk aversion still prevalent amid ongoing
tensions in Ukraine, the dollar-yen remained top heavy and
directionless for the rest of the session.
A senior NATO official said Thursday that more than 1,000
Russian troops were fighting alongside separatists in eastern
Ukraine, by far the largest such force yet reported by the
alliance.
"Similar headlines would have caused the dollar to fall more
steeply against the yen before," said Daisaku Ueno, chief foreign
exchange strategist at Mitsubishi UFJ Morgan Stanley.
Despite the increase in risk aversion -- which tends to trigger
buying of the yen as a safe haven -- the dollar didn't fall too
much against the Japanese currency.
"The dollar showed firmness after falling to some extent largely
because of fundamental differences in monetary policy in the U.S.
and Japan," Mr. Ueno said.
Investors showed a muted reaction to economic data early in the
session.
Japanese government data showed that the core consumer price
index rose 1.3% in July from a year earlier, discounting a sales
tax increase that took effect in April. That was in line with the
average forecast made by economists polled by The Wall Street
Journal.
Market participants and policy makers are keenly watching the
CPI as they try to determine how far the Bank of Japan is from
hitting its 2.0% inflation target -- a key barometer of the success
of Prime Minister Shinzo Abe's economic policies.
In other currency trading, the euro was at $1.3175 from $1.3182
and at Y136.77 from Y136.73.
Investors were reluctant to take new positions ahead of more
forthcoming data, such as euro zone inflation and U.S. personal
income and outlays. These readings could provide further evidence
for what is becoming an increasingly clear gap between the
fundamentals of the euro zone and the U.S.
"The direction is a higher dollar and a weaker euro," said Osao
Iizuka, head of FX trading at Sumitomo Mitsui Trust Bank. "But
investors are unable to move until the release of the CPI."
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.05% at 74.60.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
2150 GMT High Low 12/31
Dollar Rates
USD/JPY Japan 103.78-82 103.71-74 +0.07 103.83 103.66 -1.43
EUR/USD Euro 1.3173-76 1.3180-83 -0.05 1.3186 1.3176 -4.15
GBP/USD U.K. 1.6582-86 1.6584-90 -0.02 1.6592 1.6582 +0.16
USD/CHF Switzerland 0.9156-60 0.9149-53 +0.07 0.9158 0.9150 +2.55
USD/CAD Canada 1.0858-62 1.0859-63 -0.01 1.0863 1.0856 +2.24
AUD/USD Australia 0.9348-52 0.9355-58 -0.06 0.9359 0.9348 +4.88
NZD/USD New Zealand 0.8369-72 0.8381-85 -0.15 0.8384 0.8360 +1.81
Euro Rate
EUR/JPY Japan 136.74-78 136.71-75 +0.02 136.85 136.68 -5.51
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com