LONDON (AFX) - The dollar was soft against the yen in thin midday trade as market participants held their breath ahead of the key U.S. labour market report for March due at 1.30 pm, dealers said.
Derek Halpenny, economist at Bank of Tokyo-Mitsubishi said "I don't think we'll get much activity until 1.30 pm, when the non-farm payrolls reading will give us direction for the afternoon."
The non-farm payroll release is expected to show a rise of 58,000. "We could see a negative reading on non-farm payrolls which would increase speculation of a possible inter-meeting cut," he said,
pointing at yesterday's initial jobless claims and annual Challenger monthly employment survey which was the highest on record, with 60 pct increase on the February lay-off figures.
"Some seasonal factors could also skew the figures to the downside, which could be mildly dollar negative."
Halpenny said the dollar's weakness against the yen came from comments from Japan, where there is a China-Japan finance conference which has all the senior authorities from both countries in attendance.
He added: "Comment from the Bank of Japan that should the yen's decline continues the bank would act led to yen buying. This has affected the euro/yen cross, which in itself is capping euro/dollar at the 0.90 usd level."
Halpenny said: "We need to see some action from the ECB to ease concerns over the growth outlook in Europe."
Sterling was down against the dollar on the back of the euro's weakness.