LONDON (AFX) - The yen was firm against the dollar in midday trade, continuing to benefit from comments by Japanese officials overnight and a rally among Japanese equities, dealers said.
The dollar fell as low as 118.27 yen compared to 119.73 late Monday. Ministry of Finance officials Miyazawa and Mizoguchi said they were closely watching the foreign exchange market, indicating the government may not favour a weaker yen, according to analysts.
In addition, the Nikkei index rose three pct. Divyang Shah, global strategist at IDEAglobal.com, said participants were using the opportunity to take profits.
"We've had a good run up on dollar/yen and euro/yen. Dealers are taking profits," he said.
Meanwhile, the euro was little changed against the dollar. The latest euro zone economic news was shrugged off.
German unemployment rose by 3,000 on a seasonally adjusted basis and the jobless rate rose to an unadjusted 10.1 pct from 10.0 pct in January, the Federal Labour Office reported.
In the UK, sterling was rangebound as players focused on Chancellor of the Exchequer Gordon Brown's budget tomorrow.
In economic news, the British Retail Consortium said late Monday like-for-like sales rose 3.5 pct year-on-year in February compared with 2.9 pct increase in January.
Still ahead are U.S. revised fourth-quarter productivity figures and January factory orders. Analysts at WestLB expect the data to have little impact as investors await Friday's key February employment report.
Participants also eye today's rate decision by the Bank of Canada. A rate cut is widely expected, dealers said.