By Yumi Kuramitsu
Hong Kong, May 2 (BridgeNews) - The yen strengthened slightly against the dollar in directionless trade Wednesday amid a lack of major incentives in Asia. Position squaring by short-term players ahead of another round of Golden Week holiday in Japan also helped to make trading directionless. Market players now await the April U.S. employment report due out Friday and a policy speech by Japan's newly appointed Prime Minister Junichiro Koizumi set for Monday. The yen traded between 121.60 and 122.22 per dollar in Asia, compared with the New York closing level of 122.02.
The yen opened firmer, extending overnight gains by nearly 30 points to 121.60 against the dollar as speculative accounts hunted stop-loss orders below 121.80 after investment accounts bought the yen early in the morning.
However, short-term and speculative players began to sell the yen to cover their short dollar positions before the second half of Japan's holiday, pressuring the yen down to 122.22 at one point.
After staying above the 122 figure until the late afternoon trade, the yen again strengthened to 121.85.
"Today's trading appeared to have been very technical, rather than fundamental factors-related moves," said Noriyoshi Tsunoda, manager of the International Treasury Division Osaka at Fuji Bank Ltd.
"It seems that the trading was much dominated by some speculative accounts," he added.
Japan Koizumi's first policy speech Monday to the Diet is shaping up as a focus for the foreign exchange market.
Japanese newspapers have reported Koizumi is expected to express his determination to carry out structural reforms with emphasis on disposal of bad loans and the need for a 30-trillion-yen ceiling in new government bond issuance.
In early morning trade, euro/yen fell to a low of 108.65 in tandem with the dollar/yen's decline, but later rebounded to 109.34 on buying from investment names as well as on the back of dollar/yen's recovery to 122.22.
The cross also reflect the dollar/yen's movement in late afternoon trade, falling back below the 109 figure on the back of dollar/yen's pull back below the 122.00 area.
The euro/dollar saw quiet trading and was confined in a 0.8927-46 range.
The Japanese stock market ended virtually unchanged ahead of the Japanese holidays, and therefore, had little impact on the foreign exchange market Wednesday.
The broader market saw solid downside support on prolonged expectations over the new cabinet led by Koizumi and eased worries over the U.S. economy outlook. The Nikkei 225 Stock Average fell 3.82 points, or 0.03% to 14,421.64.
Japan's newly appointed Finance Minister Masajuro Shiokawa said he is open to further injection of public funds into financial institutions, adding that public funds should be injected if necessary to implement early disposals of bad loans, the Nihon Keizai Shimbun reported Wednesday.