LONDON (AFX) - The dollar was firmer across the board in midday trade, benefiting from inflows out of Asia and to a lesser extent Europe, dealers said.
Japanese funds seeking greener pastures were seen buying dollars as the end-March cut-off for profit repatriation reached a close, they added.
"The dollar is resilient across the board," said Nick Mertchev, economist at Halifax. He added, however, that data in the coming week will hold the key to the dollar's fortunes.
The U.S. NAPM index is scheduled for release on Monday, while labour market data is set to come out on Wednesday. In the meantime, trading has been quiet, Mertchev said.
Quite apart form the dollar's own strength, developments in Japan and Europe have put the yen and euro under pressure, dealers said. The Japanese government is expected to adopt a hands-off policy while the ailing currency weakens further. Investors do not expect the Bank of Japan intervention to prop up the yen, especially amid reports that the U.S. government discussed a weak yen policy before the March 19 U.S.-Japan summit meeting.
In Europe, the European Central Bank's reluctance to cut interest rates, despite signs that the slowdown in the U.S. is starting to affect euro zone growth, kept the euro under pressure.
The ECB's preoccupation with inflation continues, although the market has shifted its focus to growth prospects, dealers said. French data for the day did little to affect the euro, they added. According to the French statistics office, Insee, the economy there remains on track to grow by an annualised 3.0 pct in the first half of 2001, after 3.2 pct growth in 2000.
Sterling was weaker in line with the euro.
Mertchev at Halifax expects next week's Monetary Policy Committee meeting to yield a modest reduction.
However, sterling's performance is still closely tied to movements on the euro-dollar cross, he added.