TOKYO (AFX-ASIA) - Major currencies were little changed in quiet midafternoon trade, with market participants reluctant to take fresh positions ahead of expected comment by Bank of Japan governor Masaru Hayami, as well as by Federal Reserve chairman Alan Greenspan, dealers said.
Hayami will conduct at a news conference today, while Greenspan is expected to speak before the US congress tomorrow.
"I don't think they will discuss major market moving issues. But as they are the big names, investors seem to be taking a wait-and-see stance," a forex analyst with a local Japanese bank said.
He said he does not expect that the yen to encounter major selling pressure against the dollar over the short term.
"With the economic crisis in Argentina, investors cannot turn to buy the dollar against the yen actively either," he said.
"If this economic crisis spreads to Mexico, the dollar will encounter selling pressure," he said.
The dealer said currently, the situation in Argentina has "calmed down" after Buenos Aires announced cuts in spending to reduce the fiscal deficit. The dealer added that the dollar will be well-supported at around 124.90 for the time being.
Finance Minister Masajuro Shiokawa said there will be no discussion of forex levels at the upcoming G8 summit meeting in Genoa.
"Argentina's economic situation seems to have stabilised so there will be no need to discuss foreign exchange rates," Shiokawa said, when asked whether the dollar/yen would be on the G8 agenda.
The dealer said that Greenspan may make comment along the lines of "downside risk still remains" tomorrow.
"Due to recent good economic data, I don't think Greenspan will use the term 'deterioration' in his comment," he said.
"But there are still earnings concerns among US firms. I think Greenspan will likely say downside risk still remains tomorrow," he said.
The dealer said that currently, investors are not following closely the developments out of the governing council meeting of the European Central Bank, with the majority of market participants expecting the ECB to hold its rates steady this week.
"I don't think ECB officials are unhappy about the current euro/dollar level of around 0.8500. But, they are unhappy about sharp moves by the euro," he said.
He said if the ECB decides to cut its rates this week against expectations, the euro will encounter selling pressure. "The credibility of the ECB may suffer" as a result of ineffective signalling of its intentions to the forex markets, he added.