TOKYO (AFX-ASIA) - The dollar/yen was rangebound on a lack of strong leads despite negative comments on the Japanese economy by government officials, with the economy's weakness already factored into the market, dealers said. State Minister for Economic and Fiscal Policy Heizo Takenaka said Japan cannot avoid negative growth for the year to March 2002, adding that the economic situation is becoming severe after the Sept 11 attacks on the US. "There is a possibility that US GDP growth will be negative in the third and fourth quarters," Takenaka told a regular briefing. "It is unavoidable that Japanese GDP growth will also become negative." However, Standard and Poor's MMS managing analyst Hideki Naito said trading in the dollar/yen remained "sandwiched" between the 120 and 122 yen levels. "Traders are not seriously concerned with Japan's fundamentals. Their focus is on developments in Afghanistan and bio-terrorism," he said, adding that traders "are reluctant to take fresh positions into the weekend." Finance Minister Masajuro Shiokawa said this morning that the dollar/yen should reflect Japan's economic fundamentals, adding that the government is not attempting to weaken the yen excessively. "We are not intent on advocating a weak-yen policy. What we want to say is that the dollar/yen should move according to fundamentals," Shiokawa told a regular briefing. "The mass media has stressed too much the government's forex stance as a weak-yen policy," he added. Naito said most traders tend to close out their positions ahead of Thanksgiving Day in November, with opportunities to speculate open only over the next week or so. "If one of the trading ranges, the low side or the high side, is clearly breached, buying or selling from spec funds can be expected," he said. "Next week it's difficult to see a clear direction." Naito said the deliberations over the supplementary budget are neutral for the market due to the moderate size of the government's spending plans. "Some said it's too small but, in contrast, if they had said there would be a large supplementary budget, we'd be concerned about the increased budget deficit," he said. "My personal opinion in the first stage is that the size of the supplementary budget is enough. But I don't think it will trigger a boost in the Japanese economy at all." Finance Minister Shiokawa said this morning that the government will continue to emphasise reform in its planned supplementary budget but may increase spending if necessary. "We have been able to obtain consensus from the ruling parties that the supplementary budget should emphasise structural reforms," Shiokawa said. "However, we will take necessary action on the budget, depending on the future developments of the global economy" following the Sept 11 attacks. The euro continued to be weak on uncertainty over the economic outlook in the eurozone and after comments from the European Central Bank overnight that it is not ready to cut rates further.