TOKYO (AFX-ASIA) - The dollar came off its highs against the yen in midafternoon trade on a lack of follow-through buying, dealers said. The US currency rose to as high as 119.89 yen earlier, buoyed by the weak outcome of the Ministry of Finance's corporate activity survey and following a local media report that Japan's real GDP contracted by 1.2 pct over the previous quarter.
The official GDP figure is to be announced Friday. Prior to the announcement of the MoF survey results earlier today, local economists had forecast GDP would come in at between a fall of 0.3 and 1.8 pct from the previous quarter, with consensus at a decline of around 0.9 pct.
However many economists, following the MoF survey results, now forecast that second quarter GDP contracted beyond the 1.0 pct level. Yasuda Trust and Banking Co Ltd foreign exchange assistant manager Takashi Fujieda said the Japan-related news failed to have much of an impact on current trade as "it is not Japanese money that is dominating the foreign exchange market recently."
"So, people will continue to pay close attention to any news coming from the US, such as price developments in the capital markets, for fresh leads."
Fujieda said despite its top-heaviness, the dollar may soon begin to move forward given that the serious concerns over the US economy are beginning to recede following encouraging NAPM data released overnight.
"The dollar, depending on the next leads, may come back towards the 123 yen level," he said.
The euro stemmed its slide thanks to technically-driven short-covering, but remained top-heavy due to continued talk of dollar buying related to the BT-Voicestream deal, dealers said. "With confidence in the European economy also falling recently, the euro may not be able to recoup the 0.9050 usd level again," Fujieda said.